We Are...
GROWING
RESPONSIBLY
VEDANTA LIMITED
INTEGRATED REPORT
AND ANNUAL ACCOUNTS
2018-19
About the report
Growing Responsibly
This report builds on the previous
year’s theme of growth, but also
emphasises our commitment to
sustainability – to the ecosystems
we rely on, to our business and to
our stakeholders, including
employees and contractors,
customers, communities, suppliers
and to our host countries. This
focus is in keeping with the scale
of our operations and the
expectations our stakeholders
have from the organisation. It
seeks to highlight our commitment
to the global movement of
minimising ecological footprints,
upholding human rights, and
aligning business decision-making
to the long-term societal needs.
ABOUT THE REPORT
This is the second integrated report of
Vedanta Limited (VEDL). Again, in keeping
with our values, we remain committed to
ensuring maximum and relevant disclosure
of our material issues and strategic
performance. In 2018, we were proactive
in starting to report our performance and
strategy using the International Integrated
Reporting framework, as outlined by the
International Integrated Reporting
Council (IIRC).
Our integrated reports are prepared to
allow our capital providers to make an
informed assessment of VEDL’s ability to
create holistic value over the short,
medium and long term. They strive to
showcase our capacity to grow and our
ability to deliver on established strategies
that can drive significant financial and
non-financial value for all stakeholders.
SCOPE AND BOUNDARY
This report covers the reporting period
from 1 April 2018 to 31 March 2019 and
provides 3600 information on Vedanta
Limited, a subsidiary of Vedanta Resources
Limited.
It gives an overview of operations across
our business units: Zinc-Lead-Silver, Oil &
Gas, Aluminium, Power, Iron Ore, Steel and
Copper. Our assets are spread across India,
South Africa and Namibia, and across the
value chain comprising exploration, asset
development, extraction, processing and
value accretion activities.
The report aims to give a concise
explanation of VEDL’s performance,
strategy, operating model, business
outputs and outcomes using a multi-
capital approach. It includes measures of
engagement with identified material
stakeholder groups and outlines the
organisation’s governance framework,
together with its risk mitigation strategy.
APPROACH TO MATERIALITY
This report contains information that we
believe is of interest to our stakeholders,
and presents a discussion around matters
that can impact our business. We consider
an issue to be material if it can
substantively affect the organisation’s
ability to create value over the short,
medium and long term.
APPROACH TO STAKEHOLDER
ENGAGEMENT
Our stakeholders are those individuals or
organisations who have an interest in, and
whose actions impact our ability to execute
our strategy. We periodically engage with
different stakeholder groups and actively
respond to their concerns and issues.
ANNUAL ACCOUNTS
This integrated report should be read in
conjunction with the Annual Accounts
(page 244-440) to gain a complete picture
of VEDL’s financial performance. The
consolidated and standalone financial
statements in our printed report have been
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) and have been independently
audited by S.R.Batliboi & Co. LLP. The
Independent Auditor’s Report for both
consolidated and standalone financials can
be found on page 244 and 334
respectively.
BOARD AND MANAGEMENT
ASSURANCE
The Board of Directors and the Company’s
management acknowledge their
responsibility to ensure the integrity of this
integrated report. They believe the report
addresses all material issues and presents
the integrated performance of VEDL and its
impact in a fair and accurate manner. The
report has therefore been authorised for
release on 5 June, 2019.
STRATEGIC REPORT
IFC
4-5
6-7
8-9
10-13
14-17
About the report
Vedanta at a glance
Highlights 2018-19
Investment case
Chairman’s statement
CEO’s statement
GROWING RESPONSIBLY
18-19
20-21
22-23
24-25
26-27
Aluminium
Electrosteel
Oil & Gas
Copper
Zinc
OUR INTEGRATED APPROACH
28-29
30-31
32-33
34-37
38-41
42-49
50-53
54-55
56-59
60-67
Materiality matrix
Our six capitals and stakeholder value creation
Our value creation model
Strategic framework and focus areas
Key performance indicators
Opportunities and risks
Stakeholder engagement
Awards and accolades
Board of Directors
Executive Committee
MANAGEMENT REVIEW
Market review
68-75
Sustainability and CSR
76-89
Management discussion and analysis
90-135
STATUTORY REPORTS
136-149
150-205
206-243
Business responsibility report
Directors’ report
Report on corporate governance
ANNUAL ACCOUNTS
Standalone financials
244-253
254
255
256
257
258-333
Independent Auditor’s report
Balance sheet
Statement of profit and loss
Statement of cash flows
Statement of changes in equity
Notes forming part of the standalone financial
statements
Consolidated financials
334-341
342
343-344
345-346
347-348
349-440
Independent Auditor’s report
Balance sheet
Statement of profit and loss
Statement of cash flows
Statement of changes in equity
Notes forming part of the consolidated financial
statements
"Vedanta, with its strong and scalable
assets, is well positioned being at the
heart of the world's fastest growing
economy. The diversified, well-invested
and low-cost portfolio of the Company
delivered industry-leading volume
growth during the year."
Navin Agarwal
Chairman
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
01
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT We Are...
Vedanta Limited, a globally diversified
natural resources Company with
interests in zinc-lead-silver, oil & gas,
aluminium, power, iron ore, steel and
copper. We strive to make a positive,
all-round impact on the communities in
which we operate, both as an employer
and a contributor, and to leave a legacy
of pride.
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.
02
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
Main picture: Off shore facility of
Oil & Gas
Inset: Diversity and inclusion are our
core values
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 03
Operating responsibly and ethically is an integral part of Vedanta’s core values. We deliver on our commitments to all internal and external stakeholders by demonstrating these values through our actions, processes, systems and interactions. We constantly learn as we develop, and never stop looking to improve our operations. Throughout our successful expansion over the last three decades into many locations around the world, we have operated with integrity and uncompromised business ethics. We are committed to give 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 standard of living are all key elements of our sustainability framework.WHAT WE DOWe supply natural resources that help the world grow, focusing on the core product portfolio. Our strategic capabilities and alliances are singularly focused on creating and preserving value for our wide stakeholder groups and our customers.The Company has a portfolio of world-class, low-cost, scalable assets that consistently generate strong profitability and robust cash flows. We also enjoy industry-leading market shares across our core divisions.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.CORE PURPOSE AND VALUESSince we first introduced Vedanta Values, they have become a vital part of our culture and an essential underpinning of our growth and success. Every person at Vedanta understands what is important, how we work together as a team and how growth and sustainable development are at the centre of what we do. These are universal values, which guide us as we expand into new markets and countries.Our people are empowered to drive excellence and innovation and we demonstrate world-class standards of governance, safety, sustainability and social responsibility. Our business was built with a simple mission envisioned by the Group’s Chairman, Anil Agarwal: “To create a leading global natural resource Company.”We also play an increasingly significant role in the society as we continue to create jobs, supporting our host communities through our various social programmes in the areas of childcare, health, education and women empowerment, generating value along our entire supply chain and contributing to the national exchequer. Vedanta at a glance
A diversified natural
resources company
Large and diversified asset base of long-life, low-cost assets
ZINC | LEAD | SILVER
OIL & GAS
ALUMINIUM
Businesses:
• Zinc India (HZL)
• Zinc International
Production volume:
Zinc India (HZL)
894kt
Silver: 679 tonnes
Zinc International
148kt
79% share of India’s
zinc market
EBITDA (` crore):
Zinc India:
10,600
698
Zinc International
Business:
• Cairn India
Business:
• Aluminium smelters at Jharsuguda and Korba
(BALCO), and Alumina refinery at Lanjigarh
Production volume:
Average Daily Gross Operated Production
189kboepd
EBITDA (` crore):
7,656
Production volume:
Aluminium
1,959kt
1,501kt
Alumina
EBITDA (` crore):
2,202
Asset highlights:
• World’s largest integrated zinc-lead producer.
• World’s second largest zinc mine at Rampura
Agucha, India.
• 9th largest silver producer in the world.
• Developing the largest undeveloped zinc
deposit in the world at Gamsberg.
• Zinc India has R&R of 403 million tonnes with
mine life of c.25 years.
• Zinc International has R&R of more than 434
million tonnes, supporting mine life in excess
of 30 years.
Asset highlights:
• Largest private sector oil & gas producer
in India.
• Operating 25% of India’s crude oil production.
• Executing one of the largest polymer EOR
projects in the world.
Asset highlights:
• Largest installed aluminium capacity in India:
2.3 million tonnes per annum (mtpa).
• Strategically located large-scale assets with
integrated power and an Alumina refinery.
• 37% market share among domestic primary
• Footprint over a total acreage of c.50,000
aluminium producers.
square kilometres.
• Gross proved and probable reserves and
resources of 1,195mmboe.
Application areas:
• Galvanising for the infrastructure and
construction sectors.
• Die-casting alloys, brass, oxides and chemicals.
Application areas:
• Crude oil is used by hydrocarbon refineries.
• Natural gas is mainly used by the
fertiliser sector.
Application areas:
• Primary use in automotive, building &
construction, transportation and electrical
industries.
• Product portfolio includes ingots, wire rods,
billets, primary foundry alloys and rolled
products.
04
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT POWER
IRON ORE & STEEL
COPPER
Business:
• Power plants at Talwandi Sabo, Jharsuguda and
Korba
Businesses:
• Iron Ore India
• Electrosteel Steels Ltd
Sales volume:
c.14bn kWh
EBITDA (` crore):
1,527
Production volume:
Pig Iron
686kt
1.2mn tonnes
Steel
EBITDA (` crore):
Iron
584
791
Steel
Business:
• Copper India
Production volume:
90kt
EBITDA: (` crore)
Currently not operational.
Asset highlights:
• One of India’s largest power generators with
9GW diversified power portfolio.
Asset highlights:
Iron Ore
• Karnataka iron ore mine with R&R of 81 million
• TSPL is the largest thermal power producer in
tonnes, and life of 18 years.
Asset highlights:*
• One of the largest copper producers in India.
the state of Punjab.
• 3.3GW of commercial power generation
capacity, with balance for captive usage.
• Leading producers of wind power in India: 96%
thermal power and 4% from renewable energy
sources.
Application areas:
• 63% is for captive use while 37% is used for
commercial purposes, of which c.95% is
backed by long-term Power Purchase
Agreements with local Indian distribution
companies.
• Value added business: three blast furnaces
(0.8mtpa), two coke oven batteries (0.5mtpa)
and two power plants (60MW).
Steel
• Acquired in June 2018 under IBC process for an
integrated iron ore and steel business.
• Design capacity of 2.5mtpa.
• Largely long steel products.
Application areas:
• Construction, infrastructure, transport, energy,
packaging, appliances and other industry.
• Product portfolio includes pig iron, billets, TMT
bars, wire rods and ductile iron pipes.
* NB: The copper plant at Tuticorin has not been
operational since March 2018.
Application areas:
• Cables, transformers, castings, motors and
alloy-based products.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 05
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Highlights 2018-19
FINANCIAL HIGHLIGHTS
• Revenue at `90,901 crore, 1% lower y-o-y (FY2018: `92,011
Zinc International
• Commercial production commenced at Gamsberg in
crore) driven mainly by shutdown of Tuticorin smelter
partially offset by Aluminium business ramp up, ESL
acquisition and rupee depreciation.
March 2019.
Oil & Gas
• Average gross production of 189kboepd for FY2019, up
• EBITDA at `24,012 crore, 4% lower y-o-y (FY2018: `24,900
2% y-o-y.
crore).
• Robust adjusted EBITDA margin of 30% (FY2018: 35%).
• ROCE at c.13% in FY2019 (FY2018: 16.9%).
• Free cash flow (FCF) post-capex of `11,553 crore (FY2018:
`7,880 crore).
• Gross debt at `66,226 crore (FY2018: `58,159 crore), due
to ESL acquisition and temporary borrowing at Zinc India.
• Net debt at `26,958 crore (FY2018: `21,969 crore).
• Strong financial position with cash and liquid investments
of `39,268 crore.
• CRISIL and India ratings changed the outlook on
Company’s rating (CFR) from ‘AA/Positive’ to ‘AA/Stable’.
• Highest-ever contribution to the exchequer of c.`42,400
crore in FY2019.
• In December 2018, the Group purchased an economic
interest through a structured investment in the equity
shares of Anglo-American Plc, from Volcan Investments
Limited for a total consideration of `3,812 crore. As of
March 31 2019, the transaction was positively marked to
market by `1,041 crore.
BUSINESS HIGHLIGHTS FY2019
Zinc India
• Record underground mined metal production at 936kt,
up 29% y-o-y. Total mined metal production marginally
down 1% y-o-y, post closure of open-cast operations.
• Record lead metal production at 198kt, up 18% y-o-y.
• Record refined silver production at 679 tonnes,
up 22% y-o-y.
• 11 development drilling rigs as on March 2019, 99 wells
drilled and 33 wells hooked up during FY2019 in Rajasthan.
• Production sharing contracts (PSC) of Rajasthan and
Ravva block extended for 10 years, subject to conditions.
• Revenue sharing contract signed for 41 OALP blocks.
Aluminium
• Record aluminium production at 1,959kt, up 17% y-o-y
• Record alumina production from Lanjigarh refinery at
1,501kt, up 24% y-o-y.
• Q4 FY2019 hot metal cost of production significantly
lower at US$1,776 per tonne, lower by 12% q-o-q.
Power
• Record PAF of 88% at the 1,980MW TSPL plant in FY2019.
Iron Ore
• Goa operations remain suspended due to state-wide
directive from the Hon’ble Supreme Court; engagement
continues with the Government for a resumption of
mining operations.
• Production of saleable ore at Karnataka at 4.1 million
tonnes, up 89% y-o-y.
Steel
• Record annual steel production at 1.2 million tonnes for
FY2019, up 17% y-o-y.
• Achieved hot metal production run-rate of c.1.5mtpa in
FY2019.
Copper India
• Due legal process being followed to achieve a sustainable
restart of the operations.
Above: Employees at
Gamsberg
Left: Employee at
operational site,
Hindustan Zinc Limited
06
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Above: HZL Employees
Right: Employee at operational site,
Cairn Oil & Gas
CONSOLIDATED GROUP RESULTS
Particulars
Net sales/Income from operations
EBITDA
Adjusted EBITDA margin (%)1
Profit before depreciation and taxes
Profit before exceptional items and tax
Profit after taxes after exceptional items
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)
(` crore, unless stated)
FY2019
FY2018
% Change
90,901
24,012
30%
21,432
13,240
9,698
9,490
9,490
7,065
6,857
6,857
19.07
18.50
18.50
12.8%
18.85
92,011
24,900
35%
22,955
16,672
13,692
12,869
11,333
10,342
9,561
8,025
28.30
26.17
21.96
16.9%
21.20
(1)%
(4)%
–
(7)%
(21)%
(29)%
(26)%
(16)%
(32)%
(28)%
(15)%
(33)%
(29)%
(16)%
–
–
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.
REVENUE (` crore)
EBITDA (` crore)
DIVIDEND (` per share)
1
1
0
,
2
9
1
0
9
0
9
,
0
1
4
5
7
,
0
0
9
4
2
,
2
1
0
4
2
,
7
3
4
,
1
2
0
2
.
1
2
5
4
9
1
.
5
8
8
1
.
RETURN ON CAPITAL
EMPLOYED (ROCE) (%)
%
9
6
1
.
%
0
5
1
.
%
8
.
2
1
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 07
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Investment case
Delivering returns and creating value
Our investment case is focused on delivering sustainable long-term returns to our
shareholders and creating value for our broader stakeholder base. Natural resources
constitute an important engine of growth for any economy and as India’s only
diversified natural resources company, we are very well placed to make a significant
contribution to the nation’s growth.
LARGE, LOW-COST AND DIVERSIFIED
ASSET BASE WITH AN ATTRACTIVE
COMMODITY MIX
Vedanta’s large-scale, diversified asset portfolio, with
attractive cost positions in many of its core businesses,
positions the Company well to deliver strong margins
and free cash flows through the commodity cycle.
Vedanta has an attractive commodity mix, due to its
focus on base metals and oil, commodities with strong
fundamentals and leading demand growth.
This fiscal year, markets have seen an upturn in
the second half, driven by improved demand and
continuing supply side constraints, which has benefited
the commodities sector; in particular, Vedanta’s core
commodities including zinc, aluminium and oil & gas.
IDEALLY POSITIONED TO CAPITALISE
ON INDIA’S GROWTH POTENTIAL
India is Vedanta’s main market and one which has
huge growth potential since current per capita metal
consumption in India is significantly lower than the
global average.
India’s GDP is estimated to grow by 7.3% in 2019
and 7.5% in 2020. Urbanisation and industrialisation,
supported by government initiatives on infrastructure
and housing, continue to drive strong economic
growth and generate demand for natural resources.
India currently has a resources import bill of US$465
billion, which offers huge opportunities for a diversified
player such as Vedanta. The Indian government
has recently announced various policy measures to
support the metals, mining and oil sectors further
making India an attractive operational ground.
We are uniquely positioned to benefit from India’s
growth due to:
• a diversified portfolio of established operations in
India
• a strong market position as India’s largest base metals
producer and largest private sector oil producer and
• an operating team with an extensive track record of
executing growth in India
DEMAND 2019–2030 CAGR
■ India Demand ■ Global Demand
%
6
7
.
%
3
7
.
%
8
2
.
%
4
.
1
r
e
p
p
o
C
i
i
m
u
n
m
u
A
l
%
3
6
.
%
0
6
.
%
2
5
.
%
7
4
.
%
5
.
1
%
7
.
1
d
a
e
L
c
n
Z
i
%
0
.
1
l
a
o
C
t
e
M
%
5
0
.
e
r
O
n
o
r
I
%
8
3
.
l
e
k
c
N
i
%
5
2
.
%
2
2
.
%
2
2
.
%
4
0
.
l
a
o
C
l
a
m
r
e
h
T
%
4
0
.
s
a
G
&
l
i
O
Source: Wood Mackenzie
Commodity Demand Potential 2019
ALUMINIUM
CONSUMPTION
(kg/capita)
COPPER
CONSUMPTION
(kg/capita)
ZINC
CONSUMPTION
(kg/capita)
OIL
CONSUMPTION
(boe/capita)
.
4
4
3
.
2
8
9
4
.
.
5
4
.
2
3
.
6
8
7
.
1
1
.
3
.
4
0
9
.
1
.
5
0
2
.
1
India
Global
China
India
Global
China
India
Global
China
India
Global
China
Source: Wood Mackenzie, IMF, IHS Markit, BMI, BP Energy Outlook 2019
Note: All commodities demand corresponds to primary demand
India Growth Potential
GDP
(Nominal at $PPP)
$10.5tn
C A G R 9 . 0 %
$29.4tn
2018
2030
C A G R 7 . 9 %
$19,429
Per capita income
(Nominal at $PPP)
$7,759
Population
Urbanisation
2018
2030
C A G R 0 . 9 %
1.4bn
1.5bn
2018
2030
. 4 %
1
C A G R
34%
40%
2018
2030
Source: IHS Markit, United Nations World Urbanization Prospects: The 2018 Revision
08
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT
WELL-INVESTED ASSETS DRIVING CASH FLOW GROWTH
A significant proportion of our capital
investment programme has been completed,
and we are now ramping up production to
take advantage of our expanded capacity. We
have already started seeing the results of our
investments, with Zinc India and Aluminium
delivering record production in the past
year, and we expect our Zinc International
Gamsberg project to provide further impetus
to our Zinc business going forward. In the Oil &
Gas business, we have begun to implement our
growth projects with gross capex of over
US$3.2 billion, and this will enable us to
increase volumes in the near term. These
increases in production are leading to strong
cash flow generation.
OPERATIONAL EXCELLENCE AND TECHNOLOGY DRIVING EFFICIENCY
AND SUSTAINABILITY
We are consistently striving to improve our
operations, integrate our businesses through
the value chain and optimise our performance
through operational efficiencies and
innovative technological solutions.
We also employ these tools to ensure
we operate sustainably and are focused
on delivering a positive impact for all our
stakeholders and, more broadly, society as a
whole.
STRONG FINANCIAL PROFILE
Our operational performance, coupled with
a strong focus on optimisation of capital
allocation, has helped strengthen Vedanta’s
financial profile. In FY2019, our operational
excellence, supported by the robust price
environment, has helped us to deliver:
• Revenues of `90,901 crore and EBITDA of
`24,012 crore.
• Strong ROCE of c.13%.
• Deleveraging and extension of our debt
maturities through proactive liability
management exercises.
• Strong and robust FCF of `11,553 crore.
• Cash and liquid investments of `39,268 crore.
• A strong balance sheet, with respect to ND/
EBITDA and gearing, compared to our global
diversified peers.
• Interim dividend of `7,005 crore paid in
FY2019.
Growth Capex (₹ cr)
9
4
5
,
7
9
6
4
5
,
2
7
5
4
,
2017
2018
2019
Free cash flow (₹ cr)
2
1
3
3
1
,
3
5
5
,
1
1
0
8
8
,
7
2017
2018
2019
ROCE (%)
%
9
6
1
.
%
0
5
1
.
%
8
2
1
.
2017
2018
2019
PROVEN TRACK RECORD
Our management team has a diverse and
extensive range of sector and global experience,
which ensures 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 c.15%
CAGR production growth.
Production Volumes (kt)
FY2017
FY2018
FY2019
1500
1000
500
0
Oil & Gas
Underground mine
Zinc Production
Open-cast mine
Zinc Production
Aluminium Production
Jharsuguda
Aluminium Production
Balco
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 09
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Chairman’s statement
We Are...
Delivering for our people,
investors, communities and India
It gives me immense pleasure to report a
strong operating and financial
performance for the year. We have
constantly challenged ourselves to
deliver more and set new benchmarks in
the process.
This year as well, alongside robust
financials, we have again delivered
meaningful returns to our shareholders and
significantly contributed to the exchequer
as a proud corporate citizen. The Company
has set rigid standards and strong
processes to further improve its
environmental and social performance.
On each aspect, we are proud of what we
achieved in FY2019.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT
RISING TO A POSITIVE CLIMATE
Commodity prices rebounded in the last
quarter of FY2019 from a decline in the
previous quarters. The price increase
reflected the supply concerns, progress in
trade negotiations between US and China
and expectation of fiscal stimulus in China.
Metal prices are expected to continue
rebounding from 2018 troughs and face
upside risks from the possibility of tighter
than expected environmental policies and
slower than expected easing of
commodity-specific supply bottlenecks .
We responded to the market’s
opportunities in FY2019 by maximising our
productivity and increasing production
while driving down cost. Indeed, we broke
our previous production records in lead,
silver, aluminium and alumina, and set
further records in steel and power
generation.
THESE ABUNDANT VOLUMES TRANSLATED
INTO ROBUST FINANCIALS. WE
REGISTERED A REVENUE OF `90,901
CRORE WITH A HEALTHY ADJUSTED
EBITDA MARGIN OF 30% AT `24,012
CRORE. OUR STRONG OPERATIONAL
DELIVERY SUPPORTED BY PRODUCTIVITY
FOCUS HELPED IN DELIVERING FCF AT
`11,553 CRORE WITH AN INCREASE OF 47%
Y-O-Y. IN KEEPING WITH OUR PHILOSOPHY
OF CONTINUALLY REWARDING OUR
SHAREHOLDERS, WE PAID A DIVIDEND OF
`18.85 PER SHARE IN FY2019,
AGGREGATING TO A TOTAL PAYOUT OF
`7,005 CRORE DURING THE YEAR.
A GROWING PORTFOLIO
During the year we welcomed Electrosteel
Steels Ltd (ESL) into the Vedanta fold,
taking a 90% stake in the business. This
very rapidly became a turnaround success
story, as we applied our experience and
methods to ramp up output and to focus
on achieving a more profitable product
mix, commercial excellence and cost
efficiencies. Production run rate has now
increased by c.50%, from around 1 million
tonnes per annum before the acquisition to
1.5 million tonnes per annum now.
Above: Molten copper pouring from the launders
Right: Employees at operational site, Cairn Oil
& Gas
In our Oil & Gas business, the acquisition of
41 blocks in the Open Acreage Licensing
Policy (OALP) bid has established Cairn as
one of the largest private acreage holders
in the country, with a tenfold leap from
c.5,000 to c.55,000 sq. km. These blocks
have prospective resource bases of ~1.4 –
4.2 billion boe. Over the next 2-4 years, we
have a work programme commitment of
US$550 million, comprising seismic
acquisition and the drilling of over 150
exploratory wells.
In our Zinc business, our long-standing
dream to commence production at
Gamsberg was achieved this year, when
the mine started trial production in
November 2018 and subsequently shipped
the first parcel of concentrate produced in
December. This is the first large-scale
mine to open in South Africa for more
than a decade.
With one of the largest deposits in the
world, Gamsberg is a significant addition to
our Zinc business. Add this to our reserves,
skills and capacity in aluminium and oil &
gas, and we have three high-performing
businesses that are creating a world-class
powerhouse in natural resources.
PLAYING OUR PART
In FY2019, we contributed around 47% of
our turnover, amounting to c.`42,400 crore,
to the public exchequer of the countries in
which we operate. We also provided
high-quality employment for 76,000+ men
and women.
c.`42,400 crore
Contribution to exchequer
76,000+
Employees
`309 crore
CSR programme spend
3.1 million
CSR beneficiaries
"FY2019 was a year of
strong performance
leading to stronger
contributions.
Vedanta contributed
c.`42,400 cr to the
exchequer. We look
forward to FY2020 as
a year of accelerated
execution on our
growth plans resulting
in enhanced
stakeholder value."
Navin Agarwal
Chairman
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Chairman’s statement continued
In addition, Vedanta invested `309 crore in
social programmes, directly touching the
lives of three million people across more
than 1,169 villages. The year included the
milestone inauguration of our 500th ‘Nand
Ghar’. These community resource centres
are especially created for women and their
children, providing everything from
nutritious meals and healthcare to safe play
areas and e-learning resources. This is just
the beginning as we have budgeted to
invest `800 crore to set up a network of
4,000 Nand Ghars across India.
Meanwhile, our outreach programmes
helped to deliver health services to more
than 1.5 million patients; provided clean,
safe drinking water to well over 0.4 million
people; reached over 35,000 women
through dedicated self-help groups; and
guided numerous people through youth
skills programmes, sports coaching and
sustainable farming training.
Vedanta’s Medical Research Foundation,
which in the prior year inaugurated Central
India’s first world-class cancer facility in
Raipur, Chhattisgarh, delivered healthcare
to more than 1,000 patients during the
year.
Our outreach activities are delivered by a
team of over 180 dedicated engagement
professionals, who represent Vedanta in
the communities and become valued local
points of contact.
INDIA’S GROWTH: WE STAND READY
I believe India is the most exciting
economy in the world as of today. It is a
nation teeming with opportunity and
potential, as the country looks to
modernise, expand and accommodate the
rising aspirations of a growing population.
Indeed, in just a decade from now, India is
expected to be home to 1.5 billion people
and have an economy worth US$6 trillion.
This presents Vedanta, as India’s only
diversified natural resources group, with a
unique opportunity to provide the vital
commodities the country needs for
infrastructure development, asset creation,
mobility, housing, consumer goods and
general consumption.
The demand potential for our metals such
as aluminium, zinc and steel, therefore, is
immense.
Companies such as Vedanta will also be
instrumental in addressing a major national
mineral deficit as India currently imports
around 80% of its oil and mineral needs.
We stand ready to supply ‘home-grown’
products that the nation requires.
POLICY AND REGULATION
Against this backdrop, we were naturally
pleased to see a renewed focus by the
Government of India on the mining sector
as an engine of economic growth.
Its National Mineral Policy (NMP), launched
during the year, aims to increase mineral
production in India by 200% and to reduce
India’s trade deficit in minerals by 50% in
the next seven years. NMP brings in a more
"We responded
to the market’s
opportunities in
FY2019 by
maximising
productivity and
increasing
production while
driving down
cost."
Navin Agarwal
Chairman
Right: Examining the Drill Core
at HZL
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STRATEGIC REPORT Left: Employees at operational site, Vedanta Limited, Jharsuguda
Below: Employees at operational site, Cairn Oil & Gas
effective and meaningful policy, with more
transparency and better regulation
enforcement. A pro-growth ambition
requires a pro-business environment, and
the NMP will encourage private sector
participation in exploration.
OUR PEOPLE
On March 1, 2019 we welcomed Srinivasan
Venkatakrishnan (Venkat) as the Company
CEO. He is a widely respected business
leader and brings extensive global
experience in the natural resources space.
We have offered our suggestions to NITI
Aayog in its deliberations on a new pathway
for the regulatory framework for mining.
My special thanks to Kuldip Kaura, who
served us well as interim CEO before
Venkat’s arrival.
FY2020 AND BEYOND
Vedanta sits at the heart of the world’s
fastest-growing economy, and the outlook
for our products, both domestically and
globally, remains positive.
In every aspect of our business, I see a
Company inspired and focused on the
opportunities ahead of us.
In a similar vein, we welcomed landmark
policy reforms in the oil & gas sector, aimed
at raising domestic output and cutting
imports, while also providing a smooth
transition to cleaner fuels.
In South Africa, the revised Mining Charter
III, announced by the Minister for Mineral
Resources, addressed the needs of the
country and provided a highly welcome
certainty to the sector, and we support the
efforts of the Government in this regard. As
evidenced during the formal inauguration
of our Gamsberg mine by His Excellency,
Cyril Ramaphosa, the President of the
Republic, our project is in keeping with the
spirit of the Charter.
On March 1, 2019, Venkat was also
appointed as the Executive Director on the
Board. There were no other Board changes
during the year.
We will continue to innovate and reap the
benefits of digitalised mining technologies.
We will further drive up efficiencies and, in
particular, focus on creating a safety culture
to match our other world-class standards.
I also want to place on record my thanks to
the 76,000+ people who make up the
Vedanta family and who, during this year,
have innovated, broken records, and driven
up our output with ever-increasing
efficiency.
As we grow, we will continue to deliver for
you, our shareholders and stakeholders
including our own people and their
development; our communities and the
environments in which we operate. These
are exciting times for us all.
Navin Agarwal
Chairman
May 7, 2019
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
CEO’s statement
We Are...
Registering a steady sustainable performance
and setting a solid base for FY2020
I am pleased to table my first
report to all our stakeholders for
the year ending 31 March 2019. It
was a year that saw the setting of
new production records across
our businesses, commissioning of
a new zinc mine, efficiencies to
mitigate cost pressures, growth
projects being on track, an
increase in our oil reserves and
mineral resources and reserves
and a healthy dividend to
shareholders.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT What I’ve found since joining, is a Company
with a strong purpose of giving back for
the greater good, a track record of
achievement, coupled with an equally
strong sense of selflessness. Vedanta has
always recognised that business and
people are interdependent. We regard
supporting our local communities,
respecting our environments and sharing
the collective fruits of our work as
imperatives for our social licence to
operate. This is an area where we recognise
we need to improve and communicate
better and these will receive added
attention during the forthcoming year.
As we look forward to the year ahead, our
three key businesses are well positioned. In
the case of our Zinc, Lead and Silver
business, we will see the benefit of
increased volumes and therefore lower
costs, augmented by our newly
commissioned mine in South Africa. In oil &
gas, we are India’s largest private producer
of crude, and rank with the world’s
lowest-cost producers with a production,
development and exploration pipeline. In
aluminium we offer India’s largest
production capacity, supported by our own
captive power generation and we are
increasingly integrating backwards for our
own alumina.
We continue to consolidate our position as
one of the largest diversified natural
resource businesses in the world,
positioned in commodities that have a
growing demand in one of the largest,
most stable and fastest-growing
democracies in the world. We operate
long-life, high-growth, low-cost assets, and
deliver consistent returns through the
cycle. This set of strengths, together with
our focused growth strategy, excellent
talent, hunger for technology and
modernisation, and an anchor shareholder
who is committed to the long term, helps
create a truly inspirational company.
Above: Our diverse workforce at Jharsuguda
Right: Facility at Lanjigarh
SAFETY & SUSTAINABILITY
A life lost at work is a life too many and we
are deeply saddened to report that we
recorded nine fatal accidents in the Group.
‘Zero harm’ is our non-negotiable safety
tenet across all our operations at Vedanta,
and we are determined to bring about a
clear and measurable improvement in our
safety record, and are ramping up a range
of actions to achieve this. These include
strengthening compliance and
accountability; instilling a new culture of
care in the field; and ensuring transparent
reporting of incidents, near-misses and
high impact potential incidents and
consequence management.
For FY2020, we have also enhanced safety
scorecards with the three focus areas of
‘Visible Felt Leadership’, managing safety
critical tasks and better management of
business partners. We have seen some
improvement in the fourth quarter ended
31 March 2019, with no fatal accidents
across the businesses. However, we also
recognise that ‘Zero Harm’ is a journey and
we continue to monitor this as a high priority.
Our initiatives on water, energy and carbon
management progressed well during the
year. We recycled 94% of the high-volume-
low-effect-wastes such as fly ash, slag,
red-mud and jarosite. We had set ourselves
a target of reducing our greenhouse gas
intensity by 16% by FY2020, against the
baseline year of 2012. By the end of this year,
we had already achieved a 14.6% reduction
and are on track to achieving the target.
"Our key strategic
priority is focusing on
ethics, governance
and our social
licence to operate
where we will
continue our journey
towards zero harm
by ensuring greater
levels of safety; an
even gentler impact
on our environments
and resources; and
even greater inroads
into delivering
healthcare,
education, skills and
quality of life where it
is needed in our
communities."
Srinivasan Venkatakrishnan
Chief Executive Officer
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT CEO’s statement continued
We have strengthened our efforts on
tailings dam management. We apply
stringent steps to comply with all local
environmental standards, ensuring that the
water contained in this waste is treated and
made safe before it can be discharged into
local drainage systems. We have worked
with independent industry experts to
provide long-term monitoring and advice
on the safe design, construction and
operation of all our tailings facilities. I am
happy to share that these efforts are
resulting in further advances towards
making our operations sustainable. For
example, at Zinc India, instead of disposing
off tailings in land-hungry surface pits, we
have found a way to turn them into paste
and use them for backfilling of empty
underground voids. We have also
rehabilitated one retired tailing dam into a
haven of over 1.5 million trees, and another
into a vibrant football academy for India’s
most promising young talent.
BUSINESS PERFORMANCE &
GROWTH OPPORTUNITIES
The year saw our three large businesses
Zinc, Aluminium and Oil & Gas – which
together represent 90% of the Group’s
EBITDA, achieve significant milestones
which give us a strong base for the
near-term targets we have set for these
businesses.
Zinc: We are pleased with the transition
Zinc India has made from open-cast to fully
underground mining, with the latter
increasing by 29% y-o-y. The increased
silver production at our Sindesur Kurd mine
has resulted in the business now being
ranked 9th in the elite club of top 10 silver
producers with a record production of
679 tonnes during the year, up 22% y-o-y.
We now look to build on this success in
FY2020 to achieve a mined metal design
capacity of 1.2 million tonnes and further
ramp up the silver production. We are
expecting these volume increases to also
translate to unit cost reductions in the
business.
The Company achieved a significant
milestone in December 2018, when our
flagship Gamsberg project in South Africa
shipped out its first parcel of concentrate. It
is now ramping up to its target MIC
capacity of 250,000 tonnes. This new age,
fully automated and digital mine will be a
catalyst for the region’s development and a
significant contributor to Vedanta’s
earnings over the next 9-12 months.
Certainly, in FY2019 we took a step towards
becoming the largest producer of the zinc
in the world.
Oil & Gas: We continue to make progress
on the various growth projects in the Oil &
Gas business. We have deployed 11
development drilling rigs, drilled 99 wells
and hooked up 33 wells in Rajasthan during
the year. We are aiming to grow this
production base by using better well
reservoir management, enhanced recovery
technologies that we have already
successfully piloted thereby bringing on
line more new wells, augmenting our
surface infrastructure to appropriate levels
and adding further gas and off-shore
production. We are keeping a careful lid on
our lifting and discovery costs which are
some of the most competitive globally.
We won 41 blocks under the Government’s
new Open Acreage Licensing Policy (OALP)
and are excited by the potential it offers to
make Vedanta an even more significant
contributor to India’s domestic oil & gas
production. The discovery of oil & gas in
the two fields in the KG basin enhances our
position.
During the year, we also received an
extension of the Production Sharing
Contract for the Rajasthan block till 2030,
subject to certain conditions. We have now
committed to a gross capex of US$3.2
billion and we are partnering with
international oil service providers to
achieve our objective.
Aluminium: Despite cost pressures seen in
the first half of FY2019, we are very
encouraged by the many structural
changes we have put in place in the
Aluminium business to reduce the overall
cost of production – increased bauxite
sourcing, reducing our dependence on
imported alumina, improved volumes from
our alumina refinery, better coal availability,
linkage and coal stock on hand and more
efficient logistics. The business exited the
year with coal linkage at 72% of its
consumption and indigenous bauxite
sourcing to address more than one-third of
our yearly requirement. With this and the
proposed ramp up of the alumina refinery, I
am certain that our target of aluminium
COP of US$1500 per tonne is achievable in
the near term.
"Our focused
growth strategy,
excellent talent,
hunger for
technology and
modernisation and
an anchor
shareholder who is
committed to the
long term, all
combine to create a
truly inspirational
company."
Srinivasan Venkatakrishnan
Chief Executive Officer
Steel: We are also pleased with the
acquisition of ESL, which we completed in
June 2018. The year has been
transformational for them with production
ramping up to 1.2 million tonnes for the
year and with an exit run rate of c.1.5 million
tonnes and EBITDA margins of US$115 per
tonne.
RESOURCES AND RESERVES
As a natural resource company, we are
clear that the greatest value adding growth
can come from our existing land positions.
We are therefore sharply focused on the
areas of exploration and conversion of
resources to reserves, to more than off-set
depletion and create a long runway for
our assets.
We are pleased to report a healthy resources and reserves base across our businesses
as follows:
Business
Zinc India
Reserves and Resources
403 million tonnes
Zinc International 434 million tonnes
Oil & Gas
1,195mmboe gross proved and probable reserves and resources
16
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT • Delivering the best out of our assets
with the best teams and means:
Our business CEOs will remain focused
on operational delivery and having the
right management and teams in place to
deliver. Asset planning, execution,
operational excellence, cost control and
reduction, productivity enhancements,
improving realisations, risk mitigation,
use of technology, innovation and
digitalisation will all help us sweat our
assets better to deliver enhanced
performance.
Together with our Chairman, the Board,
all our colleagues and business partners,
I thank all our loyal shareholders for their
continuing support and look forward to
delivering another year of value adding
growth.
Srinivasan Venkatakrishnan
Chief Executive Officer
In our markets we expect base metals
prices to remain stable and to inch higher
to catch up with demand-supply inventory
dynamics. The refined metal market for
aluminium and zinc remains in short supply
and hence we expect favourable
conditions. Also, as the only diversified
natural resources company in India, we
expect to benefit from economic
development in this region. The various
policy moves in India are encouraging. The
approval of the National Mineral Policy,
(NMP) 2019 is an important milestone in the
liberalisation of the mines and minerals
sector in India. The new licensing policy for
awarding the oil blocks is also a positive
move to develop this sector.
OUR STRATEGIC FOCUS AREAS FOR
FY2020 WILL CONTINUE TO BE:
• Ethics, governance and our social
licence to operate:
Here we will continue our journey
towards zero harm by ensuring greater
levels of safety; an even gentler impact
on our environments and resources; and
even greater inroads into delivering
healthcare, education, skills and quality
of life where it is needed in our
communities.
• Expanding our reserves and
resource base:
Focused exploration to augment our
long-life, low-cost assets by improving
our land positions, growing our reserves
and resource positions in our businesses
by more than offsetting depletion and
bringing on stream more discoveries.
• Continued track record of delivering
value adding growth:
Continuing to build on the track record
of our three key businesses whereby the
project pipeline is strong and projects
are stress tested to deliver at least 20%+
returns off conservative price
assumptions.
• Strict capital allocation and balance
sheet focus:
As managers of the business we will
follow strict capital allocation whilst
keeping the balance sheet in sharp
focus. Balance sheet is proactively
managed with businesses having to earn
their capital before spending.
DIVIDENDS
During the year, the Board declared
dividends aggregating to `7,005 crore. This
equates to a dividend yield of 8.6%,
representing an industry-leading dividend
yield.
PEOPLE
Good results are, of course, the product of
great people, and the energies and talents
of our 76,000+ employees across locations
truly came to the fore during the year.
During the year we were also pleased to
announce a number of new appointments
as we strengthened our leadership in the
business units. Ajay Kapur was appointed
as the CEO of our Aluminium and Power
business; Pankaj Malhan as Deputy CEO of
ESL and Pankaj Kumar, CEO of Sterlite
Copper. Since the year-end, Ajay Dixit has
been appointed as the CEO of our Oil &
Gas business.
The new leadership team is excited to take
Vedanta forward on its journey to deliver
the best from its assets and create value
added growth. Importantly, it is well
supported by a deep bench-strength of
talent that will see the new leaders
emerge to fill the succession pipeline
for later years.
I also express my sincere thanks to
Mr Kuldip Kaura for his valuable
contribution to Vedanta as interim CEO and
for a seamless handover.
OUTLOOK
Looking ahead to FY2020, we have in place
the building blocks to enhance our
performance in the three key businesses.
We are excited by the prospects ahead
which include: a ramp up in zinc, lead and
silver production from Hindustan Zinc, the
benefit of a full year’s production from our
Gamsberg Zinc mine, increased
production from our Oil & Gas business as
the first phase of our projects come on
stream and embedding the structural
changes to our cost structure in our
Aluminium business while improving
volumes. For our Iron Ore Business in Goa,
we will continue to engage with and
encourage the Central and State
Governments to resume production given
the benefits to all stakeholders. We regret
the tragic loss of thirteen lives in the
demonstrations in Tuticorin and we will
continue to engage with the Government,
the relevant authorities, the courts and all
stakeholders to enable the safe and
supported restart of operations at the
copper smelter at Tuticorin.
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Growing responsibly
Aluminium
Strengthening the
business through structural
cost reduction measures
18
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
Vedanta is the largest aluminium producer in
India with a capacity of 2.3 million tonnes per
annum (mtpa) and holds a 37% market share.
It benefits from strategically located large
scale assets in the states of Chhattisgarh and
Odisha, with integrated power from captive
power plants.
Since the first hot metal tapping in March 2008, the
aluminium smelting unit at Jharsuguda has come a long way
to establish itself as the world’s largest single-location smelter.
With an installed capacity of 1.75mtpa, backed by two
smelters – 0.5mtpa and 1.25mtpa (SEZ) – and two power
plants with a combined capacity of 3615MW, it boasts a
run-rate of over 1.3mtpa. BALCO operates through its plant at
Korba in Chhattisgarh with a smelter capacity of 0.57mtpa
and power generation capacity of 2010MW. The state-of-the-
art alumina refinery at Lanjigarh feeds the aluminium smelters
at Jharsuguda and BALCO and forms a crucial link in the value
chain. It is one of the world’s largest, one-site integrated
alumina refining complexes with a current capacity of c.2mtpa
that can be ramped up to 6mtpa.
The production capability of the smelter and refinery has
been significantly enhanced in the last few years. With the
ramp up of both smelters, aluminium production has more
than doubled from c.0.8 million tonnes in 2014 to c.1.96 million
tonnes in 2019. Alumina production has increased from c.1.0
million tonnes in FY2016 to 1.5 million tonnes in FY2019 due to
debottlenecking of the refinery operations.
With the boost in production capability, both raw material
security and backward integration take on the utmost
importance for stable operations at optimal cost. All the
assets have been configured to be fully integrated operations
– from bauxite ore reserves, secured coal and energy sources,
and captive alumina refinery and power plants.
37% MARKET SHARE
2.3mtpa
capacity
FY2019 was a transformational year in this direction. On the
alumina front, it was an exceptional year for Lanjigarh refinery
with the unit achieving its highest-ever production of 1.5 million
tonnes, 24% higher than FY2018. Production loss mapping
across various stages of the refinery and relentless focus on
plant maintenance helped to improve productivity significantly.
On the refinery feedstock, multiple bauxite sources were
reduced to three to four sustainable sources, selected due to
geological similarities, supplemented with the advent of a fresh
supply of locally sourced bauxite meeting around 1/3rd of our
requirement. With a strong national mineral policy focusing on
increased production to feed the ‘Make in India’ initiative, we
expect further growth in bauxite production and the auction of
bauxite blocks as per the MMDR Act 2015. This will ensure
sustainable refinery operations at the optimal cost structure.
The efforts on improvement in operational efficiency, coupled
with robust bauxite sourcing, resulted in a substantial reduction
in captive alumina cost from US$358 per tonne in Q2 FY2019 to
US$290 per tonne in Q4 FY2019.
Power is another key input in the aluminium production
process. Significant strides have been made to improve the
coal security for our captive power plants. With our Chotia
mines operational and Tranche IV sourcing, our coal security
increased to 72% from 49% in the last two quarters.
With strong bauxite supply and coal linkages to back the raw
material needs, the focus will be on further improving our
operational and supply chain efficiencies, driving profitability
and growth in the business and achieving the goal of US$1500
per tonne for cost of production. These milestone strides take
Vedanta closer to fulfilling its vision of being the largest
low-cost manufacturer of Aluminium.
Main Picture: Aluminium Smelter at Balco
Inset: Employees at operational site, Balco
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19
Growing responsibly
Electrosteel
Electrosteel Steels (ESL):
A turnaround success story
20
20
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STRATEGIC REPORT INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
Vedanta has successfully used its experience to
acquire businesses with unfulfilled potential and
turn them around. Hindustan Zinc, BALCO and
Cairn Oil & Gas are all examples of enterprises
that have achieved exceptional growth since
their acquisition by Vedanta.
In June 2018, Vedanta acquired a 90% stake in ESL, a primary
producer of steel and downstream value-added products.
The business was acquired under the Insolvency and
Bankruptcy Code (IBC) 2016, in line with the Resolution Plan
approved by Honourable National Company Law Tribunal
(NCLT), Kolkata. The acquisition was made for a consideration
of `5,320 crore, paid upfront for a 90% stake. Following the
deal, the Company was delisted from the Indian Stock
Exchange and is now owned by Vedanta Limited through
Vedanta Star Limited.
ESL’s manufacturing facility is a green field integrated steel
plant located near Bokaro, Jharkhand, India, which has a
current capacity of 1.5mtpa and the potential to increase to
2.5mtpa. It consists primarily of two sinter plants, a coke oven,
two basic oxygen furnaces, a steel melting shop, a wire rod
mill, a bar mill, a power plant and a ductile iron pipe plant.
Prior to the acquisition, the production capacity for the
business was c.1mtpa, with around 22% of its output
comprising primary products such as pig iron and billets.
This was mainly due to sub-optimal use of assets, weak
liquidity and limited working capital that resulted in an
inadequate availability of resources.
Since June 2018, within 10 months of Vedanta’s ownership, the
business has seen consequential improvements leading to a
healthy financial position. There have been significant gains in
operational efficiencies, such as a substantial reduction in the
coke rate at blast furnaces 2 & 3 by about 3% and 7%
respectively y-o-y; optimisation of the coal mix and iron ore
blending; and improved yields of the finishing mill to 96.7%
(from 95.9% in FY2018).
Initiatives on commercial excellence by leveraging Vedanta’s
strong market presence, as well as best practices using the
broader technical experience and expertise of the Group, have
yielded exceptional results. This has been well supplemented
by an internal cost optimisation drive and focus on value-
added products. Consistent and reliable execution of the
business strategy by encouraging partnership through
leadership further accelerated the turnaround.
With operations completely revamped, FY2019 has seen record
production levels. The business achieved a run-rate of
c.1.5mtpa in Q4 FY2019. The production ramp up and other
operational efficiencies have resulted in a record EBITDA
margin for the business, improving from US$53 per tonne in
FY2018 to US$122 per tonne in Q4 FY2019.
These achievements, underpinned by a strong emphasis on
safety practices, position ESL well to become a significant
player in the Indian steel sector.
POTENTIAL TO INCREASE TO
2.5mtpa
capacity
Main picture: ESL’s operating facility
Inset: DI pipes produced by ESL
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Growing responsibly
Oil & Gas
Fuel for change:
Growing to meet India’s demand
22
22
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STRATEGIC REPORT INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
An essential element in any nation’s prosperity
is its ability to create its own energy.
And yet, 80% of oil consumed in India is currently imported.
As one of the world’s fastest growing economies, this
dependence on imports needs to be reduced in order to
foster sustainable growth.
At Vedanta, we are passionate believers in India’s potential,
and in our position to help the nation achieve it. Indeed, our
vision is to contribute half of the total oil produced in India.
Over the next few years, we aim to increase production from
today’s 200kboepd to 300kboepd. This will lay the
foundations to achieve 500kboepd in the long term, with
reserves of three billion barrels of oil equivalent.
Main picture: Mangla Processing Terminal, Barmer
Inset: Employees at operational site, MPT, Barmer
Our targets are unashamedly ambitious, but
we have a robust road map and are focusing
our energies and resources on two fronts:
MAJOR CAPEX INVESTMENT
We intend to increase volumes from our prolific operating
blocks through gross capex investment of over
US$3.2 billion, awarded on an integrated basis in partnership
with global oil field service companies. This includes
investment of US$2.8 billion in development projects to add
reserves of around 400 million barrels. These projects
comprise a rich portfolio of enhanced oil recovery, tight oil,
tight gas and facility upgrade activity. Execution has already
started on the ground, meaning we can look forward to a
quantum leap in volumes in the near term. In addition, we are
allocating exploration capex of US$400 million in the prolific
Barmer Basin and KG offshore. The target is to add over one
billion barrels of oil equivalent to our resource base.
SCALING UP BASIN EXPLORATION
We intend to increase significantly our exploration efforts
across the basins in India through participation in the OALP
and Discovered Small Fields (DSF) rounds, initiated by the
Government of India. The acquisition of 41 blocks in the
OALP bid has established Cairn as one of the largest private
acreage holders in the country, with a tenfold jump in
acreage from c.5,000 to c.55,000 sq. km. These blocks have
prospective resource bases of c.1.4 – 4.2 billion boe. Over the
next 2-4 years, we have a work programme commitment of
US$550 million, comprising seismic acquisition and the
drilling of over 150 exploratory wells.
LONG-TERM VISION TO ACHIEVE
500
kboepd
production
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2323
Growing responsibly
Copper
The Tuticorin smelter:
State of the art and ready to serve
24
24
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT The Tuticorin copper smelter, operated by
Vedanta’s Sterlite Copper business, is located in
Thoothukudi in the state of Tamil Nadu.
It ranks as one of the largest custom copper smelters in India
and is among the largest producers of copper rods in the
country. With a design capacity of 400,000 tonnes, the
business held a 33% market share of the country’s refined
copper demand of around 675,000 tonnes in FY2018. The
facilities include a custom smelter, a refinery, a phosphoric
acid plant, a sulphuric acid plant and a copper rod plant.
The plant is equipped with comprehensive air pollution
control measures and robust solid waste management
systems and facilities. It has also been able to claim ‘zero liquid
discharge’ since inception; all the effluent is treated and
recycled back into operations. The solid waste from effluent
treatment plants is disposed in secure landfill, designed in
accordance with Central Pollution Control Board guidelines.
The smelter’s water consumption is the second lowest in the
world at 6.0m3 per mt of cathode. With a 20% reduction in
specific water usage since FY2014, it has been recognised
over recent years for its excellence in water efficiency by
FICCI, UNESCO, CII and other organisations. Emissions of
sulphur dioxide are well below the prescribed standards and
are at par with several European and Japanese smelters. With
the continuous endeavour to conserve energy, the plant ranks
No. 7 in energy intensity among global smelters.
DESIGN CAPACITY OF
400,000
tonnes
The business has spent over US$74.5 million on environmental
mitigation. In particular, flue gas desulphurisation units with
bag filters, and modern technology-based reverse osmosis
plants and evaporators, are among several state-of-the-art
environmental protection measures.
Since March 2018, the plant has been shut by order of the Tamil
Nadu State Government. The Company challenged the closure
order through an appeal before the National Green Tribunal
(NGT). Following the appeal, a three-member independent
committee, set up by the NGT, set aside an order for closure by
the Tamil Nadu Pollution Control Board. The NGT ruled that the
order for closure by the Tamil Nadu Government was “non-
sustainable” and “unjustified”. The matter is currently being
heard before the Madras High Court as per the directions of
the Supreme court.
Reaffirming the commitment to the local people of
Thoothukudi, the Company has announced an `100 crore
investment in social infrastructure plans. The vision includes a
clean and green community with the planting of one million
trees, high-quality education delivered through a fine and
well-equipped school, a world-class hospital, a desalination
plant and youth development schemes.
The Company remains continuously engaged with the local
community and would like to prosper with them.
Main picture: Copper rods
Inset: Thoothukudi copper smelter
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Growing responsibly
Zinc
HZL: Partnering the state
to manage its sewage
26
26
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STRATEGIC REPORT INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
Hindustan Zinc, India’s largest integrated zinc-
lead-silver producer, is proud to be a corporate
citizen of Udaipur, which has been shortlisted
as one of India’s ‘Smart Cities’.
The Company has always maintained high environmental
standards, pioneering the adoption of clean and green
technology in running its operations. In particular, saving
water has been a special focus area.
In 2014, the Company commissioned a 20 million-litre-per-day
(MLD) sewage treatment plant (STP) to ensure Udaipur’s lake
remained free of sewage inflow pollution. The plant, which
was the first of its kind to be built by an innovative public-
private partnership, also developed an alternative source of
potable water.
In June 2017, the plant’s success led to an agreement to build a
second STP project – with double the capacity at 40 MLD. The
development was greeted with widespread local approval and
25 MLD of this extra capacity will be commissioned by
Q1 FY2020. Two further decentralised sewage treatment
plants, with a combined capacity of 15 MLD, will complete the
project.
The STP is a fully automatic plant and uses hydraulics to
minimise power consumption. The entire system is
environmentally friendly with no hazardous waste generated
during treatment. In total, the plant will treat 60 million of
Udaipur’s 70 million litres of daily sewage, conserving water
and taking crucial steps towards zero-discharge into the
locality’s lakes.
STP TO TREAT
60 million
of Udaipur's 70 million litres of daily
sewage
Main picture: Dariba Smelting Complex at night
Inset: CSR Initiative at HZL
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2727
Materiality matrix
Identifying material concerns
Continuous engagement with our internal and external stakeholders enables us to identify the relevant issues for each group and to take
the temperature on the expectations they have of the Company. The views of our stakeholders serve as important input to our
management group, to help it identify the material issues for the Company.
The materiality matrix compiled from the results of this engagement is presented below:
Critical importance
High importance
Average importance
Policies and actions to restrict
unethical business practices
Leadership development and
talent management
Public policy and advocacy
Low importance
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 in reporting on
revenue and production figures
Broader economic benefit to host
country
Community engagement
and 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, environmental
incidents management)
Energy management and climate
change
Mine and site closure plans
Employee retention
Tax transparency and reporting
Above: Community health initiative at Vedanta
Right: Building talent through teamwork at Balco
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT
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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
29
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Our six capitals and stakeholder value creation
Growing responsibly
The capitals we draw upon to
operate and create sustainable
value
30
30
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Left: Building a culture of best practices at HZL
OUR SIX CAPITALS
FINANCIAL CAPITAL
INTELLECTUAL CAPITAL
We are focused on optimising capital
allocation and maintaining a strong
balance sheet while generating strong free
cash flows. We also review all investments,
taking into account the Group’s financial
resources with a view to maximising returns
to shareholders.
As a relatively young Company, we are
keen to embrace technological
developments and encourage innovation.
We encourage our people to nurture and
implement innovative ideas which will lead
to operational improvements across our
operations.
NATURAL CAPITAL
India and Africa have favourable geology
and mineral potential. These regions
provide us with world-class mining assets
and extensive reserves and resources.
Additionally, operating our mines requires a
range of resources including water and
energy which we aim to use prudently and
sustainably.
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 civil
society. These relationships help maintain
and strengthen our licence to operate.
HUMAN CAPITAL
MANUFACTURED CAPITAL
We have employees drawn from across the
world, and their diverse skills and
experience contribute to our operations.
The mining and plant operations require
specialised skills for which we employ
qualified technical, engineering and
geology experts. In addition, we create a
culture which nurtures safety, innovation,
creativity and diversity, which helps us to
meet our business goals while also
enabling our employees to grow personally
and professionally.
We invest in best-in-class equipment and
machinery to ensure we operate as
efficiently and safely as possible, both at
our current operations and in our
expansion projects. This also supports our
strong and sustainable cash flow
generation.
CREATING VALUE FOR ALL OUR
STAKEHOLDERS
For shareholders
A return on investment
For employees
A safe and inclusive working
environment
For communities
Investment in health, education
and local businesses
For governments
Generating economic value
For suppliers, customers
and service providers
Building long-term partnerships
For civil society
Delivering sustainable growth
Further Information on our stakeholders
See pages 50-53
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
31
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Our business model
Our six value creation model
Our business model provides an overview of how Vedanta employs the six capitals to
create long-term, sustainable value for its key stakeholders. It is presented using the
International Integrated Reporting Council’s Integrated Reporting framework.
INPUTS
Financial Capital
Net worth:
`77,524 crore
Gross debt:
`66,226 crore
Capex:
`7,549 crore
Cash and cash equivalents:
`39,268 crore
Natural Capital
R&R - Zinc India:
403 million tonnes,
containing 34.6 million tonnes
of zinc-lead metal and 964.9
million ounces of silver
R&R - Zinc International:
R&R - O&G:
434 million tonnes,
containing 24.4 million tonnes
of zinc-lead metal
1,195 mmboe gross
proved and probable reserves
Energy consumption:
546 million GJ
Water consumed:
243 million m3
Coal used:
32 million tonnes
Human and Intellectual Capital
No. of employees including
contractors:
HSE employees including
contractors:
76,752
Technology Used
O&G
• World’s largest Enhanced
Oil Recovery polymer flood
project in Mangala Field
• New age technology of
High Density Multi Stage
Fracturing in horizontal
transverse wells – first
in India
1,141
Zinc International
• Smart Ore a digital
concept providing
end-to-end solutions for
mine performance and
mine condition
Social and Relationship Capital
Community investment:
`309 crore
Rated by two domestic rating
agencies – CRISIL and India
Ratings
Safety training (hrs):
1.4 million
No. of geologists including
contractors:
191
Zinc India
• Autonomous machines for
24x7 mining at SK mine &
Remote controlled LHD for
ore hauling
Aluminium
• Parameters defined for
Category “A” pots based
on power consumption,
Fe content
Strong network of
25
global and domestic
relationship banks
No of independent
Directors:
5
Manufactured Capital
PP&E
`121,356 crore
Capital CWIP
`22,236 crore
• Expansion of smelting/
mining capacities in Zinc
India and Zinc International
• Debottlenecking of
smelters at zinc and
alumina refinery
• Oil & Gas: projects in
progress to increase
production volumes
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT
OUTPUTS
Financial Capital
Turnover
`90,901 crore
EBITDA
`24,012crore
ROCE
c.13%
Attributable PAT*:
`6,857 crore
Adjusted EBITDA Margin
FCF Post capex
`11,553 crore
GHG emitted:
58 million tCO2e
Fly ash utilisation rate:
111%
30%
Natural Capital
Water recycled:
28%
Water savings:
2.3 million m3
High-Volume-Low-Effect
Waste recycled %:
94%
Human and Intellectual Capital
Total remuneration wages &
incentives paid:
`3,023 crore
Diversity ratio:
10.5%
LTIFR:
Attrition rate:
7%
0.46
per million man hours
worked
Social and Relationship Capital
Interim dividends paid:
`7,005 crore
Dividends royalty and
taxes paid to govt.
c.`42,400 crore
No of people reached by
our CSR programme
c.3.1 million
Manufactured Capital
Production target for three
main businesses
Zinc India:
Zinc
Youth provided with
vocational skills to find
employment
3,600+
No of Nand Ghars (women-
child welfare centres)
operational
502
Record production at
Aluminium, Steel business
and Zinc India underground
mines
c.1.0 million tonnes
Oil and Gas:
Gross volume
Silver
750-800 tonnes
Zinc International:
Skorpion and BMM
>170kt
Gamsberg
180-200kt
200-220kboepd
Aluminium:
Alumina
1.7-1.8 million tonnes
Aluminium
1.9-1.95 million
tonnes
* Before exceptional
WHAT WE DO
We operate across the mining value chain
focusing on long-term and low-cost assets in India
and Africa
Explore
We invest selectively in exploration
and appraisal to extend mine and
reservoir life.
Develop
We develop world-class assets, using
the latest technology to optimise
productivity.
Extract
We operate low-cost mines and oil
fields, with a clear focus on safety and
efficiency.
Process
We focus on operational excellence and
high asset utilisation to deliver top
quartile cost performance and strong
cash flow.
Market
We supply our commodities to customers
in a wide range of industry sectors, from
automotive to construction, from energy
to consumer goods.
Restore
We manage our long-life assets as
effectively as possible and return them
to a natural state at the end of their
useful life.
Delivering on our strategic priorities to
generate growth and long-term,
sustainable value
Strategic framework
See pages 34-37
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33
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Strategic framework and focus areas for short and long term
Framing our strategy while addressing the material concerns of our stakeholders
Strategic priorities
FY2019 update
Objectives for FY2020
Continued focus on world-
class ESG performance
Description: We operate as a
responsible business, focusing on
achieving ‘zero harm, zero discharge
& zero wastage’, thereby minimising
our environmental impact. We
promote social inclusion across our
operations to promote inclusive
growth. We put management systems
and processes in place to ensure our
operations create sustainable value
for all our stakeholders.
• Nine fatalities occurred in the fiscal year.
• Average score of 61% achieved in six safety performance standards.
• LTIFR reported at 0.46.
• Achieved water savings of 2.3 million cubic metres.
• Achieved c.14.6% reduction in GHG intensity over baseline of 2012.
• Achieved energy saving of 1.4 GJ.
• Audits completed on our tailing management practices; recommendations under
consideration.
• Completed baseline and social impact assessments in all businesses.
• c.111% of the generated fly ash is being utilised.
• 358 Nand Ghars constructed this year, taking the total to 502.
• 100% of new hires trained on Code of Conduct.
• On gender diversity, 20% of Vedanta's Board comprises women.
• Focus on Right Management-in-Place in each SBU with 41 SBUs in place, each led by
the respective president. SBU Management-in-Place is regularly reviewed by the Group
Chairman and Group ExCo.
• Sustainability Committee constituted.
Augment our Reserves &
Resources (R&R) base
Description: We look at ways to
expand our R&R base through
targeted and disciplined exploration
programmes. Our exploration teams
aim to discover mineral and oil
deposits in a safe and responsible
way, to replenish the resources that
support our future growth.
Delivering on growth
opportunities
Description: We are focused on
growing our operations organically by
developing brown field opportunities
in our existing portfolio, Our large
well -diversified and long life asset
portfolio offers us attractive growth
opportunities, which are evaluated
based on our return criteria for long
term value enhancement of the
Company.
Zinc India
• During the year, gross additions of 5.4 million tonnes were made to reserve & resource
(R&R), prior to depletion of 13.8 million tonnes.
• Combined R&R were estimated to be 403 million tonnes, containing 34.6 million tonnes
of zinc-lead metal and 965 million ounces of silver.
• Overall mine life continues to be more than 25 years.
Zinc International
• Combined mineral resources and ore reserves estimated at 434 million tonnes,
containing 24.4 million tonnes of metal.
Oil & Gas
• PSC extension received in Rajasthan taking our probable reserve base (2P reserves) to
567 mmboe, subject to certain conditions.
• Awarded integrated contracts for exploration in the prolific Barmer Basin, Ravva and KG
offshore with a target to add over 1 billion barrels of oil equivalent to our resource base.
• Announced gas and oil discovery in the first and second exploratory well in KG Basin in
the East Coast of India.
• Acquired 41 blocks in OALP Round I bid spread over an acreage of c.50,000 sq. km with
a prospective resources base of c.1.4 – 4.2 bn boe, establishing Vedanta as one of the
largest private acreage holders in the country.
Zinc India
• Ramp up of underground mines delivered mined metal production at 936kt, 29% higher
y-o-y and offsetting the closure of open-cast operations last year.
• The announced mining projects are nearing completion and expected to reach
1.2 million MT per annum of mined metal capacity in FY2020.
Zinc International
• Achieved the milestone of Gamsberg zinc project commissioning; despatched first
shipment in December 2018.
• 41mt rock moved during the year, including pre-stripping and healthy stockpile of 1.0mt
built for smooth feed to Plant.
Oil & Gas
• Integrated contracts have been awarded to global oilfield service providers such as
Halliburton, Schlumberger, Petrofac and GE-Baker Hughes, to be executed in a span
ranging from one to three years to achieve a near-term target of 300kboepd.
• Gas production ramp up through early production facility commenced; peak rate of 90
mmscfd expected in Q1 FY2020.
• Revenue-sharing contracts for 41 exploration blocks awarded through OALP 1, and two
discovered small satellite fields secured in Discovered Small Fields (DSF) round 2.
ESL
• Completed the acquisition of ESL to further our plans on iron ore business.
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KPIs
• LTIFR
• CSR footprint
• Gender diversity
Risks
(HSE)
• Health, safety and environment
• Tailings dam stability
• Managing relationship with
stakeholders
• Regulatory and legal risk
• Achieve score >75% in ten safety performance standards.
• Zero fatal accidents and an LTIFR of 0.30.
• Achieve water saving of 2.5 million cubic metres.
• Achieve fly ash utilisation of 80%.
• Reduce our GHG emissions intensity by 16% from a 2012 baseline
by 2020.
• Achieve energy savings of 1.75 million GJ.
• Third-party review of tailings/ash dyke management system and
development of site specific improvement plan (India operations)
• Ensure alignment of all BU plans with issues identified during
baseline surveys.
• 1,200 Nand Ghars to be constructed in FY2020.
• Roll out of employee engagement platform across the Group.
• A standard on-line community grievance record/redressal software
(NIVARAN) across the Group.
• Achieve 33% female representation at Vedanta Board-level by 2020.
• Diversity % improvement in our campus hiring program by 5%.
• Ensuring right ExCo & succession for each business.
• Start exploration in 41 blocks awarded through first round auctions
Resources in O&G
(HSE)
• Total 2P+2C Reserves &
• Health, safety and environment
• Total R&R in Zinc India & ZI
• Discovery risk
• Regulatory and legal risk
• Further appraisal at KG Basin to establish its size and commerciality
• High ranked prospects are being taken up for drilling of wells across
Oil & Gas
under OALP.
our assets.
• Participate and fulfil the government’s vision of tripling the
mineral sector output over seven years as announced under New
• Continue to build R&R base and generate new green field targets for
Mineral Policy.
our commodities/metals.
• Revenue
• ROCE
• FCF post-capex
• Growth capex
• Major project delivery
• Cairn related challenges
• Regulatory and legal risk
• Ramp up underground mines to 1.2 million tonnes MIC per annum
• Planning for the next phase of expansion from 1.2 to 1.35mtpa
mined metal capacity announced in April 2018 is underway.
Zinc India
design capacity.
Zinc International
• Ramp up Phase I production in H1 of FY2020.
• Carry out a project study for Swartberg Phase 2 and Gamsberg
Phase 2 to extend the life of the Black Mountain complex.
• Complete the feasibility study for an integrated smelter-refinery with
250ktpa metal production.
Oil & Gas
• Evaluate further opportunities to expand the exploration portfolio
through OALP and other opportunities.
• Execute growth projects within schedule and cost.
STRATEGIC REPORT Strategic priorities
FY2019 update
Objectives for FY2020
KPIs
Risks
Continued focus on world-
class ESG performance
Description: We operate as a
responsible business, focusing on
achieving ‘zero harm, zero discharge
& zero wastage’, thereby minimising
our environmental impact. We
promote social inclusion across our
operations to promote inclusive
growth. We put management systems
and processes in place to ensure our
operations create sustainable value
for all our stakeholders.
• Nine fatalities occurred in the fiscal year.
• Average score of 61% achieved in six safety performance standards.
• LTIFR reported at 0.46.
• Achieved water savings of 2.3 million cubic metres.
• Achieved c.14.6% reduction in GHG intensity over baseline of 2012.
• Achieved energy saving of 1.4 GJ.
• Audits completed on our tailing management practices; recommendations under
consideration.
• Completed baseline and social impact assessments in all businesses.
• c.111% of the generated fly ash is being utilised.
• 358 Nand Ghars constructed this year, taking the total to 502.
• 100% of new hires trained on Code of Conduct.
• On gender diversity, 20% of Vedanta's Board comprises women.
• Focus on Right Management-in-Place in each SBU with 41 SBUs in place, each led by
the respective president. SBU Management-in-Place is regularly reviewed by the Group
Chairman and Group ExCo.
• Sustainability Committee constituted.
Augment our Reserves &
Resources (R&R) base
Zinc India
Description: We look at ways to
expand our R&R base through
targeted and disciplined exploration
programmes. Our exploration teams
aim to discover mineral and oil
deposits in a safe and responsible
way, to replenish the resources that
support our future growth.
• During the year, gross additions of 5.4 million tonnes were made to reserve & resource
(R&R), prior to depletion of 13.8 million tonnes.
• Combined R&R were estimated to be 403 million tonnes, containing 34.6 million tonnes
of zinc-lead metal and 965 million ounces of silver.
• Overall mine life continues to be more than 25 years.
• Combined mineral resources and ore reserves estimated at 434 million tonnes,
containing 24.4 million tonnes of metal.
Zinc International
Oil & Gas
• PSC extension received in Rajasthan taking our probable reserve base (2P reserves) to
567 mmboe, subject to certain conditions.
• Awarded integrated contracts for exploration in the prolific Barmer Basin, Ravva and KG
offshore with a target to add over 1 billion barrels of oil equivalent to our resource base.
• Announced gas and oil discovery in the first and second exploratory well in KG Basin in
the East Coast of India.
• Acquired 41 blocks in OALP Round I bid spread over an acreage of c.50,000 sq. km with
a prospective resources base of c.1.4 – 4.2 bn boe, establishing Vedanta as one of the
largest private acreage holders in the country.
Delivering on growth
opportunities
Zinc India
Description: We are focused on
growing our operations organically by
developing brown field opportunities
in our existing portfolio, Our large
well -diversified and long life asset
portfolio offers us attractive growth
opportunities, which are evaluated
based on our return criteria for long
term value enhancement of the
Company.
• Ramp up of underground mines delivered mined metal production at 936kt, 29% higher
y-o-y and offsetting the closure of open-cast operations last year.
• The announced mining projects are nearing completion and expected to reach
1.2 million MT per annum of mined metal capacity in FY2020.
• Achieved the milestone of Gamsberg zinc project commissioning; despatched first
• 41mt rock moved during the year, including pre-stripping and healthy stockpile of 1.0mt
Zinc International
shipment in December 2018.
built for smooth feed to Plant.
Oil & Gas
• Integrated contracts have been awarded to global oilfield service providers such as
Halliburton, Schlumberger, Petrofac and GE-Baker Hughes, to be executed in a span
ranging from one to three years to achieve a near-term target of 300kboepd.
• Gas production ramp up through early production facility commenced; peak rate of 90
mmscfd expected in Q1 FY2020.
• Revenue-sharing contracts for 41 exploration blocks awarded through OALP 1, and two
discovered small satellite fields secured in Discovered Small Fields (DSF) round 2.
ESL
• Completed the acquisition of ESL to further our plans on iron ore business.
• LTIFR
• CSR footprint
• Gender diversity
• Health, safety and environment
(HSE)
• Tailings dam stability
• Managing relationship with
stakeholders
• Regulatory and legal risk
• Total 2P+2C Reserves &
Resources in O&G
• Total R&R in Zinc India & ZI
• Health, safety and environment
(HSE)
• Discovery risk
• Regulatory and legal risk
• Revenue
• ROCE
• FCF post-capex
• Growth capex
• Major project delivery
• Cairn related challenges
• Regulatory and legal risk
• Achieve score >75% in ten safety performance standards.
• Zero fatal accidents and an LTIFR of 0.30.
• Achieve water saving of 2.5 million cubic metres.
• Achieve fly ash utilisation of 80%.
• Reduce our GHG emissions intensity by 16% from a 2012 baseline
by 2020.
• Achieve energy savings of 1.75 million GJ.
• Third-party review of tailings/ash dyke management system and
development of site specific improvement plan (India operations)
• Ensure alignment of all BU plans with issues identified during
baseline surveys.
• 1,200 Nand Ghars to be constructed in FY2020.
• Roll out of employee engagement platform across the Group.
• A standard on-line community grievance record/redressal software
(NIVARAN) across the Group.
• Achieve 33% female representation at Vedanta Board-level by 2020.
• Diversity % improvement in our campus hiring program by 5%.
• Ensuring right ExCo & succession for each business.
Oil & Gas
• Start exploration in 41 blocks awarded through first round auctions
under OALP.
• Further appraisal at KG Basin to establish its size and commerciality
• High ranked prospects are being taken up for drilling of wells across
our assets.
• Participate and fulfil the government’s vision of tripling the
mineral sector output over seven years as announced under New
Mineral Policy.
• Continue to build R&R base and generate new green field targets for
our commodities/metals.
Zinc India
• Ramp up underground mines to 1.2 million tonnes MIC per annum
design capacity.
• Planning for the next phase of expansion from 1.2 to 1.35mtpa
mined metal capacity announced in April 2018 is underway.
Zinc International
• Ramp up Phase I production in H1 of FY2020.
• Carry out a project study for Swartberg Phase 2 and Gamsberg
Phase 2 to extend the life of the Black Mountain complex.
• Complete the feasibility study for an integrated smelter-refinery with
250ktpa metal production.
Oil & Gas
• Evaluate further opportunities to expand the exploration portfolio
through OALP and other opportunities.
• Execute growth projects within schedule and cost.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
35
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Strategic framework
Continued
Strategic priorities
FY2019 update
Objectives for FY2020
KPIs
Risks
Optimise capital allocation
and maintain strong balance
sheet
Description: Our focus is on
generating strong business cash
flows and maintaining strict capital
discipline in investing in profitable high
IRR projects. Our aim is to maintain
a strong balance sheet through
proactive liability management. We
also review all investments (organic
& acquisitions) based on our strict
capital allocation framework, with
a view to maximising returns for
shareholders.
Operational excellence
Description: We strive for all-round
operational excellence to achieve
benchmark performance across
our business, by debottlenecking
our assets to enhance production,
supported by improved digital and
technology solutions. Our efforts are
focused on enhancing profitability by
optimising our cost and improving
realisation through the right marketing
strategies.
• FCF improvement from ` 7,880 crore to ` 11,553 crore, up 47% y-o-y
• Net debt increased from ` 21,969 crore to ` 26,958 crore, primarily due to Electrosteel
• Generate healthy free cash flow from our operations.
• Disciplined capex across projects to generate healthy ROCE.
acquisition
• ND / EBITDA at 1.1x on a consolidated basis
• Dividend worth 7,005 crores, 18.85/share distributed in VEDL and 10,187 crores, 20/share
in Hindustan Zinc
• Improve credit ratings.
• Reduce working capital.
• FCF post-capex
• ND/EBITDA (Consol)
• EPS (before exceptional
items)
• Interest cover ratio
• Dividend
• Access to capital
• Fluctuation in commodity
prices (including oil) and
currency exchange rates
• Regulatory and legal risk
• Tax related matters
• Fluctuation in commodity
prices (including oil) and
currency exchange rates
• Health, safety and environment
(HSE)
• Tailings dam stability
• Loss of assets or profit due to
natural calamities
Zinc India
• Achieve significantly higher production for both mined and finished
Adj. EBITDA margin
EBITDA
FCF post-capex
ROCE
metal at c.1.0 million tonnes.
• Rampup silver production to 750-800 tonnes.
• Achieve cost of production for zinc at < $1,000/mt.
• De-bottleneck and expand smelting capacity to maintain mines/
smelter synergies at higher levels of production.
Zinc International
• Production of Skorpion @ 110kt & BMM at 60kt.
• Gamsberg production to ramp up to 180-200kt.
• For FY2020, with the surge in drilling activities and well hook up,
production volumes to be 200-220 kboepd.
• Control opex at c.-$7.5/boe.
Oil & Gas
Aluminium
• Production at Lanjigarh refinery of 1.7-1.8 million tonnes, with
aluminium production at smelters remaining stable at 1.9-1.95mtpa.
• Reduce the aluminium COP, with a target of $1725-1775/T.
• Improve coal linkage security further and ensure better
materialisation and continued production at our Chotia mines.
• Enhance our raw material security of bauxite & alumina.
• Engage with government and relevant authorities to enable restart
Copper & Iron ore
of operations.
Steel
• Achieve full-year production to rated capacity of c.1.5mtpa.
Zinc India
• Underground mined metal production at 936kt, up 29%; total mined metal production
down 1% despite closure of open-cast operations.
• Record refined lead metal production at 198kt, up 18%.
• Record silver production at 679 MT, up 22%.
• Underground crusher and production shaft were commissioned for 3.75mtpa at
Sindesar Khurd.
• New mills commissioned at SK and Zawar taking milling capacity to 6.2mtpa and
4.7mtpa respectively.
• At RA mines the second paste fill plant was commissioned ahead of schedule during Q4.
Zinc International
• Pre-stripping of Pit 112 completed as per mine plan.
Oil & Gas
• 11 development drilling rigs as on March 2019, with 99 wells drilled and 33 wells hooked
up in Rajasthan during the year.
• Production from the offshore assets stood at a combined 32,881boepd, higher by 19%
y-o-y, supported by gains from the Cambay infill campaign.
• Gas production increased by 37% to 63.5 mmscfd due to debottlenecking of exiting
facilities.
• Signed an agreement with GSPL India Gasnet Limited for constructing eighteen-inches
diameter pipeline connecting Raageshwari Gas Terminal to Pali and thereon connecting
Mehsana to Bhatinda to Palanpur.
• 4 wells were fracked in RDG field, including the Hi-Way frack technique enabling
connection to more reservoirs, leading to improved production and recovery of the field.
• Proactive geo-steering with the state of art LWD tools having advanced bed boundary
detection capabilities was used. Successfully placed 370m lateral section in FM3 clean
oil zone which resulted in well going online with production c.10kboepd.
• Volume enhancement through e-line campaign with innovative paraphernalia of
advanced robotic tools in Ravva.
• Completed well preparations works for the CB/OS-2 drilling campaign with rigless
intervention methods for the side-track wells; leading to significant saving of rig time
and lower cost.
Aluminium
• Record aluminium production at the smelters at 1,959kt, up 17% y-o-y.
• Record alumina production from Lanjigarh refinery at 1,501kt, up 24% y-o-y due to
debottlenecking of the refinery.
• Locally-sourced bauxite of c.1.3 MT during the year; alumina COP flat y-o-y at US$322/T
despite higher caustic and imported bauxite cost.
• 3.2 million tonnes of coal linkages added during FY2019 from Tranche IV auctions,
taking our coal security to 72%.
• Significant improvement in coal materialisation in Q4 FY2019, resulting in no power
imports from the grid in last 4 months of FY2019.
• FY2019 exit CoP for aluminium was less than $1800 per tonne.
Steel
• Record steel production at 1.2 million tonnes, up 17% y-o-y, as a result of improved plant
availability and optimum utilisation. Exited with a run rate of c.1.5mtpa.
• FY2019 EBITDA margin of 19% was among the sector leaders in India.
Copper and Iron Ore
• Karnataka production at 4.1 million tonnes, up 89% y-o-y.
• Continued engagement with the Government and local communities to restart
operations at Goa and Tuticorin.
36
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Optimise capital allocation
and maintain strong balance
sheet
Description: Our focus is on
generating strong business cash
flows and maintaining strict capital
discipline in investing in profitable high
IRR projects. Our aim is to maintain
a strong balance sheet through
proactive liability management. We
also review all investments (organic
& acquisitions) based on our strict
capital allocation framework, with
a view to maximising returns for
shareholders.
Description: We strive for all-round
operational excellence to achieve
benchmark performance across
our business, by debottlenecking
our assets to enhance production,
supported by improved digital and
technology solutions. Our efforts are
focused on enhancing profitability by
optimising our cost and improving
realisation through the right marketing
strategies.
Operational excellence
Zinc India
• Underground mined metal production at 936kt, up 29%; total mined metal production
down 1% despite closure of open-cast operations.
• Record refined lead metal production at 198kt, up 18%.
• Record silver production at 679 MT, up 22%.
• Underground crusher and production shaft were commissioned for 3.75mtpa at
• New mills commissioned at SK and Zawar taking milling capacity to 6.2mtpa and
• At RA mines the second paste fill plant was commissioned ahead of schedule during Q4.
Sindesar Khurd.
4.7mtpa respectively.
Zinc International
Oil & Gas
• Pre-stripping of Pit 112 completed as per mine plan.
• 11 development drilling rigs as on March 2019, with 99 wells drilled and 33 wells hooked
up in Rajasthan during the year.
• Production from the offshore assets stood at a combined 32,881boepd, higher by 19%
y-o-y, supported by gains from the Cambay infill campaign.
• Gas production increased by 37% to 63.5 mmscfd due to debottlenecking of exiting
facilities.
• Signed an agreement with GSPL India Gasnet Limited for constructing eighteen-inches
diameter pipeline connecting Raageshwari Gas Terminal to Pali and thereon connecting
Mehsana to Bhatinda to Palanpur.
• 4 wells were fracked in RDG field, including the Hi-Way frack technique enabling
connection to more reservoirs, leading to improved production and recovery of the field.
• Proactive geo-steering with the state of art LWD tools having advanced bed boundary
detection capabilities was used. Successfully placed 370m lateral section in FM3 clean
oil zone which resulted in well going online with production c.10kboepd.
• Volume enhancement through e-line campaign with innovative paraphernalia of
advanced robotic tools in Ravva.
• Completed well preparations works for the CB/OS-2 drilling campaign with rigless
intervention methods for the side-track wells; leading to significant saving of rig time
and lower cost.
Aluminium
• Record aluminium production at the smelters at 1,959kt, up 17% y-o-y.
• Record alumina production from Lanjigarh refinery at 1,501kt, up 24% y-o-y due to
debottlenecking of the refinery.
• Locally-sourced bauxite of c.1.3 MT during the year; alumina COP flat y-o-y at US$322/T
despite higher caustic and imported bauxite cost.
• 3.2 million tonnes of coal linkages added during FY2019 from Tranche IV auctions,
taking our coal security to 72%.
• Significant improvement in coal materialisation in Q4 FY2019, resulting in no power
imports from the grid in last 4 months of FY2019.
• FY2019 exit CoP for aluminium was less than $1800 per tonne.
Steel
• Record steel production at 1.2 million tonnes, up 17% y-o-y, as a result of improved plant
availability and optimum utilisation. Exited with a run rate of c.1.5mtpa.
• FY2019 EBITDA margin of 19% was among the sector leaders in India.
Copper and Iron Ore
• Karnataka production at 4.1 million tonnes, up 89% y-o-y.
• Continued engagement with the Government and local communities to restart
operations at Goa and Tuticorin.
Strategic priorities
FY2019 update
Objectives for FY2020
KPIs
Risks
• FCF improvement from ` 7,880 crore to ` 11,553 crore, up 47% y-o-y
• Net debt increased from ` 21,969 crore to ` 26,958 crore, primarily due to Electrosteel
acquisition
• ND / EBITDA at 1.1x on a consolidated basis
in Hindustan Zinc
• Dividend worth 7,005 crores, 18.85/share distributed in VEDL and 10,187 crores, 20/share
• Generate healthy free cash flow from our operations.
• Disciplined capex across projects to generate healthy ROCE.
• Improve credit ratings.
• Reduce working capital.
• FCF post-capex
• ND/EBITDA (Consol)
• EPS (before exceptional
items)
• Interest cover ratio
• Dividend
• Access to capital
• Fluctuation in commodity
prices (including oil) and
currency exchange rates
• Regulatory and legal risk
• Tax related matters
EBITDA
Adj. EBITDA margin
FCF post-capex
ROCE
• Fluctuation in commodity
prices (including oil) and
currency exchange rates
• Health, safety and environment
(HSE)
• Tailings dam stability
• Loss of assets or profit due to
natural calamities
Zinc India
• Achieve significantly higher production for both mined and finished
metal at c.1.0 million tonnes.
• Rampup silver production to 750-800 tonnes.
• Achieve cost of production for zinc at < $1,000/mt.
• De-bottleneck and expand smelting capacity to maintain mines/
smelter synergies at higher levels of production.
Zinc International
• Production of Skorpion @ 110kt & BMM at 60kt.
• Gamsberg production to ramp up to 180-200kt.
Oil & Gas
• For FY2020, with the surge in drilling activities and well hook up,
production volumes to be 200-220 kboepd.
• Control opex at c.-$7.5/boe.
Aluminium
• Production at Lanjigarh refinery of 1.7-1.8 million tonnes, with
aluminium production at smelters remaining stable at 1.9-1.95mtpa.
• Reduce the aluminium COP, with a target of $1725-1775/T.
• Improve coal linkage security further and ensure better
materialisation and continued production at our Chotia mines.
• Enhance our raw material security of bauxite & alumina.
Copper & Iron ore
• Engage with government and relevant authorities to enable restart
of operations.
Steel
• Achieve full-year production to rated capacity of c.1.5mtpa.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
37
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Key performance indicators
GROWTH
REVENUE
(` CRORE)
1
1
0
,
2
9
1
0
9
0
9
,
0
1
4
5
7
,
EBITDA
(` CRORE)
0
0
9
4
2
,
2
1
0
4
2
,
7
3
4
,
1
2
FCF POST CAPEX
(` CRORE)
2
1
3
3
1
,
3
5
5
,
1
1
0
8
8
,
7
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
Description
Revenue represents the value of goods sold
and services provided to third parties during
the year.
Commentary
FY2019, consolidated revenue was at
`90,901 crore compared with `92,011 crore in
FY2018. This was mainly on account of lower
zinc volumes, shutdown of Tuticorin smelter
and lower metal prices partially offset by ramp
up of volumes at Aluminium, volume addition
from ESL acquisition, improved oil prices and
rupee depreciation.
Description
Earnings before interest, tax, depreciation and
amortisation (EBITDA) is a factor of volume,
prices and cost of production. This measure is
calculated by adjusting operating profit for
special items and adding depreciation and
amortisation.
Commentary
EBITDA for FY2019 was at `24,012 crore, 4%
lower y-o-y. This was mainly on account of
shutdown of Tuticorin smelter, input
commodity inflation, lower metal prices and
higher cost of production, which was partially
offset by ramp up of volumes at aluminium,
volume addition from ESL acquisition,
improved oil prices and rupee depreciation.
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 `11,553 crore in FY2019,
driven by active working capital management
and disciplined capital allocation.
OTHER KEY FINANCIAL RATIOS
DEBTORS TURNOVER RATIO*
(IN TIMES)
INVENTORY TURNOVER RATIO
(IN TIMES)
CURRENT RATIO
(IN TIMES)
1
.
5
7
.
5
5
6
1
.
6
2
.
6
3
5
.
.
9
0
.
8
0
.
8
0
.
6
3
3
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
Description
The debtors’ turnover ratio is an accounting
measure used to quantify a company’s
effectiveness in collecting its receivables. This
is calculated as a ratio of revenue from
operation to average trade receivables.
Commentary
The reduction in debtors’ turnover is mainly
on account of shutdown of Tuticorin smelter
as it generated significant revenue being a
custom smelting business and change in
revenue mix across businesses.
* Excluding Power Debtor
Description
The inventory turnover ratio is an efficiency
ratio that shows how effectively inventory is
managed. This is calculated as a ratio of cost
of goods sold to average inventory.
Commentary
The inventory turnover ratio for the Company
was at 5.3 times in FY2019 as compared to 6.2
times in FY2018.
Description
The current ratio is a liquidity ratio that
measures a company’s ability to pay
short-term obligations or those due within
one year. This is calculated as a ratio of
current assets to current liabilities.
Commentary
The current ratio of the Company remained
flat at c.0.8 times.
38
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT GROWTH
OTHER KEY FINANCIAL RATIOS
RETURN ON CAPITAL
EMPLOYED (ROCE)
(%)
%
9
6
1
.
%
0
5
1
.
%
8
.
2
1
ADJUSTED EBITDA MARGIN
(%)
NET DEBT/EBITDA
(CONSOLIDATED)
(IN TIMES)
%
9
3
%
5
3
%
0
3
1
.
1
.
9
0
INTEREST COVER
(IN TIMES)
.
8
0
1
.
0
0
1
8
.
7
.
4
0
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
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 down by 4.1%, primarily
owing to closure of Tuticorin
smelter, inflation in commodity
prices leading to increase in cost
of production and higher
depreciation charge partially
offset by volume growth in
Aluminium, ESL acquisition and
rupee depreciation.
Description
Calculated as EBITDA margin
excluding EBITDA and turnover
from custom smelting of Copper
India and Zinc India businesses.
Commentary
Adjusted EBITDA margin for
FY2019 was 30% (FY2018: 35%).
Description
This ratio represents the level of
leverage of the Company. It
represents the strength of the
balance sheet of Vedanta
Limited. Net debt is calculated in
the manner as defined in Note 18
of the consolidated financial
statements.
Commentary
Net debt/EBITDA ratio as at
31 March, 2019 was at 1.1x,
compared to 0.9x as at 31 March,
2018. The net debt is higher
primarily due to ESL acquisition.
Description
The ratio is a representation of
the ability of the Company to
service its debt. It is computed as
a ratio of EBITDA divided by gross
finance costs (including
capitalised interest) less
investment revenue.
Commentary
The interest cover for the
Company was at c.7.8 times,
lower y-o-y on account of lower
EBITDA and higher net finance
costs due to increase in debt.
DEBT EQUITY RATIO
(IN TIMES)
OPERATING PROFIT MARGIN
(%)
NET PROFIT MARGIN
(%)
RETURN ON NET WORTH
(%)
0
.
1
.
9
0
7
.
0
%
0
2
%
0
2
%
5
1
%
7
1
%
2
1
%
0
1
%
5
1
%
5
1
%
2
1
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
Description
This is a financial ratio indicating
the relative proportion of
shareholders’ equity and debt
used to finance a company’s
assets. It is calculated as a ratio of
total external borrowing to total
equity (share capital + reserves +
minority).
Commentary
The ratio has increased to 0.9
times in FY2019 primarily
because of increase in gross
debt due to ESL acquisition and
temporary borrowing at Zinc
India.
Description
Operating profit margin is a
profitability or performance ratio
used to calculate the percentage
of profit a company produces
from its operations. This is
calculated as a ratio of operating
profit (EBITDA less depreciation)
to revenue from operations.
Commentary
The operating profit margin was
lower in FY2019 as compared to
FY2018, primarily due to
increase in depreciation in the
current year.
Description
This is a measure of the
profitability of a company. It is
calculated as a ratio of net profit
(before exceptional items and
DDT) to revenue from operations.
Commentary
The operating profit margin was
lower in FY2019 as compared to
FY2018, primarily due to
increase in depreciation in the
current year.
Description
This is a measure of the
profitability of a company. It is
calculated as a ratio of net profit
(before exceptional items and
DDT) to average net worth (share
capital + reserves + minority).
Commentary
The return on net worth has
reduced, mainly on account of
increase in depreciation expense
during the year partially offset by
consequent tax impact on the
same.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
39
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Key performance indicators
Continued
LONG-TERM VALUE
GROWTH CAPEX
(` CRORE)
9
4
5
,
7
9
6
4
5
,
2
7
5
4
,
EPS
(BEFORE EXCEPTIONAL ITEMS
AND DDT) (` PER SHARE)
0
7
.
4
2
6
9
.
1
2
0
5
8
1
.
DIVIDEND
(` PER SHARE)
0
2
.
1
2
5
4
9
1
.
5
8
8
1
.
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
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 `7,549 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 our Aluminium capacities.
RESERVES AND RESOURCES (R&R)
Zinc India (million tonnes)
4
0
4
1
1
4
3
0
4
Description
This represents the net profit attributable to
equity shareholders and is stated before
exceptional items and dividend distribution
tax (net of tax and minority interest impacts).
Commentary
In FY2019, EPS before exceptional items was
at `18.50 per share. This mainly reflects the
impact of higher depreciation charges and
lower EBITDA.
Description
Dividend per share is the total of the final
dividend recommended by the Board in
relation to the year, and the interim dividend
paid out during the year.
Commentary
The Board has recommended a total interim
dividend of `18.85 per share this year
compared with `21.2 per share in the
previous year.
Zinc International (million tonnes)
4
3
4
8
8
2
4
0
3
Oil & Gas (mmboe)
3
7
2
,
1
3
6
2
,
1
5
9
1
,
1
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
Description
Reserves and resources are based on specified guidelines for each commodity and region.
Commentary
Zinc India:
During the year, gross additions of 5.4 million tonnes were made to reserves and resources, prior to depletion of 13.8 million tonnes. Overall mine
life continues to be more than 25 years.
Zinc International:
During the year, gross additions of 130.36 million tonnes were made to reserves and resources, prior to depletion. Zinc International is further
pleased to announce the declaration of a maiden resource at its Big Syncline project, located on its Black Mountain mining licence in South Africa.
Resource estimation was carried out by SRK Consulting (UK) and resulted in an inferred resource of 151.7 million tonnes grading 3.6% (zinc and
lead). The majority of the resource is accessible through open-cast operations at low stripping ratios. Overall mine life is more than 30 years.
Oil & Gas:
During FY2019, the gross proven and probable reserves and resources were depleted by 68mmboe primarily due to production during the year.
40
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT SUSTAINABLE DEVELOPMENT
LTIFR
(MILLION MAN HOURS)
6
4
0
.
0
4
0
.
5
3
0
.
GENDER DIVERSITY
(%)
%
6
0
1
.
%
5
0
1
.
%
1
.
9
CSR FOOTPRINT
(MILLION BENEFICIARIES)
.
4
3
1
.
3
2
.
2
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
Description
The lost time injury frequency rate (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
This year the LTIFR was 0.46. Safety remains
the key focus across businesses.
Description
The percentage of women in the total
permanent employee workforce.
Commentary
We provide equal opportunities to men and
women. During the year, the ratio of female
employees was 10.5% of total employees.
Description
The total number of beneficiaries through our
community development programmes across
all our operations.
Commentary
We benefited around 3.1 million people this
year through our community development
projects comprising community health,
nutrition, education, water and sanitation,
sustainable livelihood, women empowerment
and bio-investment.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
41
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Opportunities and risks
Opportunities
We proactively work to
minimise our risks by
accepting and eliminating
them while identifying and
taking advantage of
opportunities. Our strategic
priorities and strong
opportunity management
culture give us a competitive
edge in spotting
opportunities and making
the best of them.
Above: An employee at the Mangala Processing Terminal, Barmer
POSITIVE MARKET FUNDAMENTALS
The commodities market is fundamentally
on an uptick, underpinned by a supply-
demand deficit in most of the
commodities. Most base metals prices
face upside risks from the possibility of
tighter than expected environmental
policies and a slower than expected easing
of commodity-specific supply bottlenecks.
Additionally, a stable global growth is
expected that will lead to higher demand
for metals and oil.
Vedanta’s diversified portfolio and
attractive basket of commodities position
us well to take advantage of this projected
uplift in demand and a resulting
improvement in price outlook.
INDIA-LED GROWTH
India is the primary market for Vedanta. The
Indian economy remains one of the fastest
growing in the world supported by strong
macroeconomic fundamentals and policy
changes, attributable to the sustained rise
in consumption and a gradual revival in
investments, especially with a greater focus
on infrastructure development. Together
with the economic reforms and supportive
policies of the government, the growth
path for the economy is healthy. This is also
supported by urbanisation plans of the
country and positive demographic factors
such as an increasing workforce.
As India’s only diversified natural resources
group, we are uniquely placed to take
advantage of this domestic growth.
A PORTFOLIO OF DIVERSIFIED
LOW-COST ASSETS WITH LONG
ASSET LIFE
Vedanta has a portfolio of world-class,
low-cost, scalable assets that consistently
generate strong profits and robust cash
flows enjoying industry-leading market
shares across our core divisions. The long
asset life of this scalable diversified
portfolio provides a strong base of
opportunities for Vedanta. The many
brownfield opportunities being explored in
each of the businesses are indicative of this
position.
UNDER-UTILISED RESOURCES IN
INDIA WITH SIGNIFICANTLY LOW PER
CAPITA CONSUMPTION
India has a huge underutilised potential of
rich and diverse resources which can be
tapped with Vedanta’s extensive
exploration plans. This has been very
strongly supported by the recent policy
reforms of the government. Additionally,
the per capita consumption of metals in
India is significantly lower than global
averages, providing ample opportunities
for growth.
TECHNOLOGICAL ADVANCEMENT
AND DIGITALISATION
New technological and digital advances
have helped in improving productivity and
reducing costs, and so improving
profitability for the Company.
42
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Risks
PRINCIPAL RISKS AND UNCERTAINTIES
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
MON I T O R
FINANCIAL
OPERATIONAL
Our risk management framework is
designed to be simple & consistent and
provides 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 in 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-level Risk Management
Committee in evaluating the design and
effectiveness of the risk mitigation
programme and control systems. The
Group Risk Management Committee
(GRMC) meets every quarter and
comprises the Group Chief Executive
Officer, Group Chief Financial Officer,
Non-Executive Director and Director-
Management Assurance. The Group Head
of 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
43
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Each principal subsidiary 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 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.
Opportunities and risks
Continued
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, whose
role is to create awareness of risks at 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 team
in the businesses is accountable for
governance of the risk management
framework and they provide regular
updates to the GRMC.
Each business has developed its own risk
matrix, 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
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.
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 the above structure, other key
risk governance and oversight committees
in the Group include the following:
• The Committee of Directors (COD) and
Finance Standing Committee (FSC)
having oversight on treasury-related
risks. The COD comprises of Directors of
the Company and the FSC comprises of
the CEO, Non-Executive Director, and
Group CFO. Invitees to these committee
meetings are the business CFOs, Group
Head Treasury and BU Treasury Heads. In
addition to this, the Investment
Committee reviews the investment-
related risks.
• The Board has also constituted a
Sustainability Committee effective from
April 1st, 2019, which will oversee the
Company’s sustainability performance
and the adequacy of the Company’s
sustainability framework.
• The Group Project/Capex Council which
evaluates risks while reviewing any
capital investment decisions as well as
applying risk management framework to
projects.
In addition to the above, there are various
Group-level councils such as the
Procurement Council, Tax Council, HSE
Council, Insurance Council, CSR
Committee, and so on, who work towards
identifying and mitigating various risks in
the Group.
The Group has a consistently applied
methodology for identifying risks at the
individual business level for existing
operations and for ongoing projects.
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 any
changes in their nature and extent since
the last assessment and discuss the
control measures which are in place as well
as further action plans. The control
44
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT The Board, with the assistance of 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
Sustainability risks
Impact
Mitigation
Risk direction
Health, safety and environment (HSE)
The resources sector is subject to extensive
health, safety and environmental laws,
regulations and standards. Evolving
requirements and stakeholder expectations
could result in increased cost or litigation
or threaten the viability of operations in
extreme cases.
Emissions and climate change: Our
global presence exposes us to a number of
jurisdictions in which regulations or laws
have been, or are being, considered to limit
or reduce emissions. The likely effect of
these changes could be to increase the
cost for fossil fuels, impose levies for
emissions in excess of certain permitted
levels, and increase administrative costs for
monitoring and reporting. Increasing
regulation of greenhouse gas (GHG)
emissions, including the progressive
introduction of carbon emissions trading
mechanisms and tighter emission
reduction targets, is likely to raise costs and
reduce demand growth.
• HSE is a high priority area for Vedanta. Compliance with international
and local regulations and standards, protecting our people,
communities and the environment from harm and our operations
from business interruptions are key focus areas.
• Policies and standards are in place to mitigate and minimise any
HSE-related occurrences. Safety standards issued/continue to be
issued to reduce risk level in high risk areas. Structured monitoring
and a review mechanism and system of positive compliance
reporting are in place.
• The Company has implemented a set of standards to align its
sustainability framework with international practice. A structured
sustainability assurance programme continues to operate in the
business divisions covering environment, health, safety, community
relations and human rights aspects, and is designed to embed our
commitment at operational level.
• All businesses have appropriate policies in place for occupational
health-related matters, supported by structured processes, controls
and technology.
• Strong focus on safety during project planning/execution and
contract workmen safety.
• Building safety targets into performance management to incentivise
safe behaviour and effective risk management.
• A 'Leadership in Action' programme has been launched for
identification of critical risks to identify critical risk controls and to
measure, monitor and report the control effectiveness.
• Leadership remains focused on a zero-harm culture across the
organisation.
• Carbon forum with business representation monitors developments
and sets out defensive policies, strategy and actions.
• Defined targets and action plans in place to reduce the carbon
intensity of our operations. This includes reducing emission intensity,
increasing renewable mix and green cover at locations. New Emission
norms for thermal power plants will require capex – working towards
the same.
• Institutionalise systems to manage carbon risks and opportunities
across the business over the life cycle of its products.
• Engage with stakeholders in creating awareness and developing
climate change solutions.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
45
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Opportunities and risks
Continued
Sustainability risks continued
Impact
Mitigation
Risk direction
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.
Risk has been increased compared to last
year, due to community-related incidents at
some of our facilities.
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 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; UN Millennium Development Goals (UNMDG); CSR
National Voluntary Guidelines of the Ministry of Corporate Affairs,
Government of India; and the UN Sustainable Development Goals.
• Our BU teams are proactively engaging with communities and
stakeholders through a proper and structured engagement plan, with
the objective of working with them as partners.
• Business ExCos factor in these inputs, and then decide upon focus
areas of CSR and budgets while also aligning with strategic business
priorities.
• All BUs follow well-laid processes for recording and resolving all
community grievances.
• Every business has a dedicated Community Development Manager,
who is a part of the BU ExCo. They are supported by dedicated teams
of community professionals, totalling nearly 110 people.
• 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.
• Periodic meetings with existing and potential 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.
• CSR communication and engagement with all stakeholders – within
and outside communities.
• 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.
• Vedanta is currently reviewing its approach to tailings dam
management, particularly upstream raised dams, in the wake of
Brumadihno in Brazil.
• Golder Associates has been engaged to review tailings dam
operations, including improvement opportunities/remedial works
required and the application of Operational Maintenance and
Surveillance (OMS) manuals in all operations. This is an oversight role
in addition to technical design and guidance arranged by respective
business units. Technical guidelines are also being developed.
• Those responsible for dam management received training from
Golder Associates and will receive ongoing support & coaching from
international consultants.
• Management standard implemented with business involvement.
• System of monitoring of tailings dams instituted.
46
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Operational risks
Impact
Mitigation
Risk direction
Challenges in Aluminium and
Power business
Our projects have been completed 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 and concerns around ash
utilisation/evacuation.
• Global uncertainties reflected as fall in aluminium LME prices.
• Continue to pursue new coal linkages to ensure coal security.
Operations at Chotia coal mines also started.
• Local sourcing of bauxite from Odisha.
• Jharsuguda facilities have ramped up satisfactorily.
• New Ash Dyke being built in Jharsuguda.
• Dedicated teams working towards addressing the issue of new
emission norms for power plants.
• Global technical experts have been inducted to strengthen
operational excellence.
• Continuous focus on plant operating efficiency improvement
programme to achieve design parameters, manpower rationalisation,
logistics and cost reduction initiatives.
• Continuous augmentation of power security and infrastructure.
• Strong management team continues to work towards sustainable
low-cost production, operational excellence and securing key raw
material linkages.
• Talwandi Saboo (TSPL) power plant matters are being addressed
structurally by a competent team.
• Dedicated exploration cell with continuous focus on enhancing
exploration capabilities.
• Appropriate organisation and adequate financial allocation in place
for exploration.
• Strategic priority is to add to our reserves and resources by extending
resources at a faster rate than we deplete them, through continuous
focus on drilling and exploration programme.
• Exploration Executive Committee (ExCo) has been established to
develop and implement strategy and review projects Group-wide.
• Exploration-related systems being strengthened and standardised
Group wide and new technologies being utilised wherever
appropriate.
• International technical experts and agencies are working closely with
our exploration teams to enhance our capabilities.
• Group-level focus on formulating necessary frameworks, policies and
procedures in line with best practices and international standards.
• Implementation and adoption of various best-in-class tools and
technologies for information security to create a robust security
posture.
• Special focus to strengthen the security landscape of plant technical
systems (PTS) through various initiatives.
• Adoption of various international standards relating to Information
Security, Disaster Recovery & Business Continuity Management, IT
Risk Management and setting up internal IT processes and practices
in line with these standards.
• Periodic assessment of entire IT systems landscape and governance
framework from vulnerability and penetration perspective through
reputed expert agencies and addressing the identified observations
in a time-bound manner.
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 & 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.
Breaches in IT / cybersecurity
Like many global organisations, our
reliance on computers and network
technology is increasing. These systems
could be subject to security breaches
resulting in theft, disclosure or corruption
of key/strategic information. Security
breaches could also result in
misappropriation of funds or disruptions to
our business operations. A cybersecurity
breach could have an impact on business
operations.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
47
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Opportunities and risks
Continued
Operational risks continued
Impact
Mitigation
Risk direction
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.
Cairn-related challenges
Cairn India has a 70% participating interest
in Rajasthan Block. The production sharing
contract (PSC) of Rajasthan Block runs until
2020. The Government of India has
granted its approval for 10 year extension at
less favourable terms, pursuant to its policy
for extension of Pre-NELP Exploration
Blocks, subject to certain conditions.
Production ramp up vs envisaged may
have impact on profitability.
Compliance risks
Impact
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 of or increase in
royalties or taxation rates, export duty,
impacts on mining rights/bans, and
change in legislation.
• Vedanta has taken appropriate group insurance cover to mitigate this
risk.
• 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 capacity to
underwrite our risk.
• Established mechanism of periodic insurance review in place at all
entities. However, any occurrence not fully covered by insurance
could have an adverse effect on the Group’s business.
• Continuous monitoring and periodic review of security function.
• Continue to focus on capability building within the Group.
• Ongoing dialogue with the Government and relevant stakeholders to
address the conditions prescribed.
• The applicability of the Pre-NELP Extension Policy to the RJ Block is
currently sub judice.
• The growth projects are being implemented through an Integrated
Contracting approach. Contracts have a built-in mechanism for risk
and reward.
• A project management committee & a project operating committee
are being put in place to provide support to the outsourcing partner
and address issues on time to enable better quality control as well as
timely execution for growth projects.
• Third party is engaged to conduct a study on growth projects with
key objectives of providing assurance on project delivery, highlight
risks, identify areas needing management intervention and suggest
opportunities to deliver the outcome.
Mitigation
Risk direction
• The Group and its business divisions monitor regulatory
developments on an ongoing basis.
• Business-level teams identify and meet regulatory obligations and
respond to emerging requirements.
• Focus has been to communicate our responsible mining credentials
through representations to government and industry associations.
• Continue to demonstrate the Group’s commitment to sustainability
by proactive environmental, safety and CSR practices. Ongoing
engagement with local community/media/NGOs.
• SOX compliant subsidiaries.
• Common compliance monitoring system being implemented in
Group companies. Legal requirements and a responsible person for
compliance have been mapped in the system.
• Legal Counsels within the Group continue to work on strengthening
the compliance and governance framework and the resolution of
legal disputes.
• Competent in-house legal organisation is in place at all the
businesses and the legal teams have been strengthened with
induction of senior legal professionals across all Group companies.
• Standard operating procedures (SOPs) have been implemented
across our businesses for compliance monitoring.
• 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 have also been standardised.
• Framework for monitoring performance against anti-bribery and
corruption guidelines is also in place.
48
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Compliance risks continued
Impact
Mitigation
Risk direction
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.
• Tax Council reviews all key tax litigations and provides advice to the
Group.
• Continue to engage with concerned authorities on tax matters.
• Robust organisation in place at business and Group level to handle
tax-related matters.
• Continue to consult and obtain opinion from reputable tax consulting
firms on major tax matters to mitigate the tax risks on the Group and
its subsidiaries.
Financial risks
Impact
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.
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.
Major project delivery
Shortfall in achievement of expansion
projects stated objectives leading to
challenges in achieving stated business
milestones – existing & new growth
projects.
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 free cash flow
generation, may cause stress on the
Company’s ability to raise financing at
competitive terms.
Mitigation
Risk direction
• The Group has a well-diversified portfolio which acts as a hedge
against fluctuations in commodities and delivers cash flows through
the cycle.
• Pursue low-cost production, allowing profitable supply throughout
the commodity price cycle.
• Vedanta considers exposure to commodity price fluctuations to be
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 & due approval from ExCo.
• Our Forex policy prohibits forex speculation.
• Robust controls in forex management to hedge currency risk liabilities
on a back-to-back basis.
• Finance standing committee reviews all forex and commodity-related
risks and suggests necessary courses of action as needed by
business divisions.
• Seek to mitigate the impact of short-term 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.
• Enlisting internationally renowned engineering and technology
partners on all projects.
• Empowered organisation structure has been put in place to drive
growth projects.
• Strong focus on 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 time lines.
• Mines being developed using best-in-class technology and
equipment and ensuring the highest level of productivity and safety.
• Stage gate process to review risks and remedy at multiple stages on
the way.
• Robust quality control procedures have also been implemented to
check safety and quality of services/design/actual physical work.
• A focused team continues to work on proactive refinancing initiatives
with an objective to contain cost and extend tenor.
• The team is actively building the pipeline for long-term funds for
near- to medium-term requirements both for refinancing and growth
capex.
• Track record of good relations with banks, and of raising borrowings
in last few years.
• The Group’s structured investments, including the Volcan transaction,
are exposed to underlying equity price variance of Anglo shares.
(For further details on the Volcan transaction, refer note 38 of the
consolidated financial statements).
• Regular discussions with rating agencies to build confidence in
operating performance.
• Business teams ensure continued compliance with the Group’s
treasury policies that govern our financial risk management practices.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
49
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Stakeholder engagement
WE AIM TO FORGE
STRONG RELATIONSHIPS
WITH OUR KEY
STAKEHOLDERS AND
UPHOLD HUMAN RIGHTS
WHEREVER WE OPERATE,
AS WE MAINTAIN OUR
SOCIAL LICENSE TO
OPERATE.
50
50
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Our approach
At Vedanta we are committed to constructive dialogue with our key stakeholders. We believe that open, ongoing and
systemic communication is key to building successful relationships with our stakeholders. This also helps us to identify
their material issues, and 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 potentially vulnerable communities such as indigenous people. The
standards follow five principles of engagement:
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
reported 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.
Our key stakeholders
Local
Community
Governments
Employees
Vedanta
Industry
(suppliers, customers,
peers & media)
Shareholders,
Investors &
Lenders
Civil Society
Left: HZL Samadhan Project
Right top: Investing in the future of children through CSR initiatives
Right bottom: Access to affordable and quality healthcare
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
51
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Stakeholder engagement
Continued
The table below sets out how we engaged with our stakeholders during the year to address their concerns and meet their expectations.
Stakeholder
Types of Engagement
Key Expectations
Initiatives in FY2019
Local Community
Community group
meetings, village council
meetings, community
needs/social impact
assessments, public
hearings, grievance
mechanisms, cultural
events, engaging
philanthropically with
communities via the
Vedanta Foundation
• Needs-based community
• Completed baseline,
development projects
• Increasing reach of
community development
programmes
• Improved grievance
mechanism for
community
need, impact and SWOT
assessments in all BUs
• `309 crores invested in
social investment
• 3.1 million beneficiaries of
community development
programmes
• Community grievance
process followed at all
operations
Employees
Shareholders, Investors & Lenders
Chairman’s workshops,
Chairman’s/CEO’s town hall
meetings, feedback
sessions, performance
management systems,
various meetings at plant
level, V-Connect mentor
programme, event
management committee
and welfare committee,
women’s club
• Improved training on
• 1.4 million man-hours of
safety
training on safety
• Increased opportunities
• 22% 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
Regular updates, investor
meetings, Sustainability Day
for investor interaction, site
visits, AGM and conference,
quarterly results calls,
dedicated contact channel
– ir@vedanta.co.in and
sustainability@vedanta.co.in
• Consistent disclosure on
economic, social, and
environmental
performance
• `90,901 crore in revenue
with an interim dividend of
`18.85 per share
• Sustainability assurance
audits conducted through
Vedanta Sustainability
Assurance Programme
(VSAP)
• Bi-weekly investor
briefings and pro-active
engagement with the
investment community on
ESG topics
52
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT Stakeholder
Civil Society
Types of Engagement
Key Expectations
Initiatives in FY2019
Partnerships with and
membership of international
organisations, working
relationships with
organisations on specific
projects, engagement with
international, national, and
local NGOs, conferences
and workshops, dedicated
contact channel –
sustainability@vedanta.co.in
• Expectation of being
• Membership of
aligned with the global
sustainability agenda
• Compliance with Human
Rights
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 to the
Modern Slavery Act
Customer satisfaction
surveys, scorecards,
in-person visits to
customers, supplier, and
vendor meetings
• Consistent
• Hotline service and email
implementation of the
code of business conduct
& ethics
• Ensuring contractual
integrity
ID to receive whistle-
blower 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
• `309 crores invested in
community development
economic development of
the nation
• c.`42,400 crore in
payments to the
exchequer
Industry
(Suppliers, Customers, Peers, Media)
Governments
For more information on our activities during the year,
please see our Sustainability section on pages 76-89
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
53
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Awards and accolades
S No.
Name of Awards
Category/Recognition
Recipient (Business Unit)
Operational Excellence
1
IMC RBNQA National Quality Award
Manufacturing Excellence
Quality Circle Conventions
Improvement Projects
Balco
Balco
Safety award by Oil Industry Safety
Directorate (OISD)
FTSE4Good Emerging Index Series
Individual category
Cairn Oil & Gas
Sectorial leadership in Environmental,
Social and Governance (ESG)
performance
HZL
Sustainable Development & CSR
5
ET 2 Good 4 Good Rating
CSR Activities
Dainik Jagran Award
FICCI CSR Award
Poverty Eradication
Private Sector Companies with turnover
of `3001 crores per annum and above
Balco
Balco
Nand Ghar
Sustainability Award 4.0
Sustainable Business practices
Balco
CII-ITC Sustainability Award 2018
FICCI Corporate Social Responsibility Award
2017 – 2018
CII-ITC Sustainability Awards 2018
Significant Achievement for impactful
CSR programs and initiatives across all
assets
Cairn Oil & Gas
Health, Water and Sanitation category
Cairn Oil & Gas
For Corporate Excellence
• Outstanding Accomplishment Award
• Commendation for Significant
Achievement in CSR
• Excellence in Environment Management
HZL
Greentech Safety Award
Gold/Safety Management
Vedanta Limited, Lanjigarh
India Green Manufacturing Award
India CSR Leadership Award 2019
Resource Conservation and Green
Manufacturing Processes
‘Aajeevika Skill Development’ initiatives
including Dhokra Art and Tribal Painting
Vedanta Limited, Lanjigarh
Vedanta Limited, Lanjigarh
ET Now- CSR Leadership Awards
Sports Development
Vedanta Football & Nand Ghar
Golden Bird award
Environment Excellence
Shrishti Good Green Governance Award
Environment
Apex India CSR Excellence Award 2018
Gold Award
TSPL
TSPL
TSPL
AON Hewitt Best Employer Award
Commitment to Engagement (2017-2018)
Vedanta Limited, Jharsuguda
20
National Best Employer Brands 2018
HR practices and exemplary use of
marketing communication for Human
Resource Development
Vedanta Limited, Jharsuguda
Human Resources
CII HR Excellence Award
21
ET HR Talent Management Leadership
Award
Great Place to Work Certification
ET Now Dream Companies to Work For
HR Initiatives
Leadership Development Program
Balco
Balco
Employer of Choice and Workplace
quality recognition
Employer of Choice and Workplace
quality recognition
Cairn Oil & Gas
Cairn Oil & Gas
HZL
‘Significant Achievement in HR Excellence’
during 9th CII-HR Excellence Award 2018-19
HR practices
CII National HR Excellence Award
Strong Commitment to HR Excellence
Vedanta Limited, Lanjigarh unit
The Employer Branding Awards
National Best Employer Brand
Sterlite Copper
2
3
4
6
7
8
9
10
11
12
13
14
15
16
17
18
19
22
23
24
25
26
27
54
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT S No.
Name of Awards
Category/Recognition
Recipient (Business Unit)
Smart logistics Summit & Awards 2019
Smart Exporter Metals
Vedanta Limited, Jharsuguda
Innovation & Technology
7th International Bauxite – Alumina &
28
Aluminium Conference & Exhibition
Improvement Projects
INCAL
Improvement Projects
Indian Institute of Metals – Non-Ferrous Best
Performance Award 2018
For best quality, registering highest
product development and environmental
performance during 2017-18
QualTech Award 2018
Improvement Category
SECONA Shield Awards 2018
Innovative Practices & Technology
29
30
31
32
33
Energy Conservation
34
CII National Energy Conservation Award
Energy
35
36
37
38
Clean Energy Management Insight Award
Gold in SEEM National Energy Management
Awards 2017
Spreading awareness about ISO 50001
Energy Management System
Industries Captive Power Plant
19th National Award for Excellence in Energy
Management 2018
Energy Efficient Unit
Golden Bird award
Energy Efficiency
Industry Achiever/National Contributor
39
1st Edition of CNBC – Awaaz Rajasthan Ratna
Award
‘The Best Company in Mining Sector’ in
the state of Rajasthan
Power – Thermal & Hydro – Best Project
category
Most Outstanding Project in the
Geotechnical Engineering Project
Division
Balco
Balco
HZL
Sesa Goa Iron ore – Value
Addition Business unit
Vedanta Sesa Goa Iron Ore –
Security Team
Balco
Balco
Chanderiya Smelting Complex
(HZL)
Sesa Goa Iron ore – Value
Addition Business unit
HZL
TSPL
Gamsberg Business Partner,
VZI
40
Dun & Bradstreet Infra Awards 2018
41
South African Institution of Civil
Engineering, Awards for the Most
Outstanding Civil Engineering
Achievements of the Year
Business Awards
42
Best Environment Practices by SKOCH
Leadership Award for Energy
43
44
5th CII Environmental Best Practices Award
2018
45
‘Dun & Bradstreet Corporate Award 2018’
46
Recognised for the ‘Best Investor Relations
Program’ (nominated by the sell-side) and
for hosting the “Second Best Analyst Day”
(overall) by Institutional Investor Magazine’s
2018 all-Asia (ex-Japan) Executive Team
rankings.
7th FICCI Safety Systems Excellence Award
Platinum Prize
Bhagyam field, Cairn Oil & Gas
Natural gas recovery – zero flaring during
frack well milling operation project under
the category – ‘most innovative
environmental project’
Cairn Oil & Gas
Natural gas recovery – zero flaring during
frack well milling operation project under
the category – ‘most innovative
environmental project’
Cairn Oil & Gas
Under ‘Non-Ferrous & Precious Metals’
category for their role as ‘Champions of
Change’ in transformation of the Country
HZL
Basic Materials industry
Vedanta Limited
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
55
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Board of Directors
Sitting
| Ravi Kant, Navin Agarwal, Lalita Gupte and UK Sinha
Standing
Aman Mehta, Tarun Jain, Arun Kumar GR, Srinivasan Venkatakrishnan,
|
Priya Agarwal and K. Venkataramanan
56
56
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT
INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS
FINANCIAL STATEMENTS
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
5757
Board of Directors
NAVIN AGARWAL
Executive Chairman
K VENKATARAMANAN
Non-Executive Independent Director
UK SINHA
Non-Executive Independent Director
Mr. Venkataramanan brings with him
four decades of experience and has also
been CEO & Managing Director, Larsen
& Toubro Limited (L&T) from April, 2012.
Further, he has also served on the L&T
Board from May, 1999 until his retirement
in September, 2015. He has spearheaded
L&T in the world of E&C, strengthened
every aspect of EPC value chain and
transformed L&T to one of the respected
names in the global EPC fraternity. He is
a graduate in Chemical Engineering from
Indian Institute of Technology, Delhi. He is
also a distinguished alumni awardee from
IIT Delhi.
LALITA D GUPTE
Non-Executive Independent Director
Ms. Gupte has more than three decades
of experience in the financial sector and
has held various leadership positions
in diverse areas. She is the former Joint
Managing Director of ICICI Bank and
was the Chairperson of ICICI Venture
Funds Management Company Limited
till October 2016. She is presently
Chairperson of ICICI Lombard General
Insurance Co Ltd and India Infradebt Ltd
and sits on other Boards. Ms Gupte holds
a Bachelor's Degree in Economics (Hons)
and a Master's degree in Management
Studies. She did her advanced
management programme from INSEAD.
Mr. Sinha 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 SEBI, he was the
Chairman & MD of UTI Asset Management
Company Pvt. Ltd. and has also worked for
the Department of Economic Affairs under
the Ministry of Finance.
RAVI KANT
Non-Executive Independent Director
Mr. Kant brings with him experience
of around five decades and he is an
Honorable Industrial Professor at the
University of Warwick. In addition, he is
also a visiting Leader at China Europe
International Business School, Shanghai.
He served as the Managing Director and
Vice Chairman in Tata Motors. He was
the Chairman of the Indian Institute of
Management, Rohtak and Indian Institute
of Information Technology, Allahabad.
He had completed his education at
Mayo College, Ajmer, Indian Institute
of Technology, Kharagpur and Aston
University, Birmingham, UK from where he
did his Masters in Management in Industry.
He was conferred with an Honorary D.Sc.
by the Aston University, in Birmingham in
July 2008.
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 was recently conferred the
‘Industrialist of the Year 2018’ award by
the Bombay Management Association
for his outstanding contribution to
the natural resources sector. He has
led Vedanta’s evolution to the highest
standards of corporate governance
and enhanced engagement with key
stakeholders. He pursues a vision to
enhance the enormous potential of the
natural resources sector as an engine
of growth for the country.
AMAN MEHTA
Non-Executive Independent
Director
Mr. Mehta has over 35 years
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
as well as overseas. Formerly, he has
been a Supervisory Board member of
ING Group NV and a Director of Raffles
Holdings, Singapore. He is also a
member of the governing board of the
Indian School of Business, Hyderabad.
Mr. Mehta is an economics graduate
from Delhi University.
58
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT PRIYA AGARWAL
Non-Executive Director
SRINIVASAN VENKATAKRISHNAN
Whole-Time Director & CEO
Ms. Agarwal brings with her experience
in Public Relations with Ogilvy & Mather
and in Human Resources with Korn
Ferry International. She has done B.Sc.
Psychology with Business Management
from the University of Warwick in the UK.
TARUN JAIN
Whole-Time Director
Mr. Jain has 36 years of experience in the
corporate finance, audit and accounting,
tax, mergers and acquisitions and
corporate secretarial functions. He is
responsible for our strategic financial
matters, including corporate finance,
corporate strategy, business development
and mergers and acquisitions. Mr. Jain was
a Whole-Time Director of the Company till
March 31, 2019 and has been reappointed
as a NED effective April 01, 2019. 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.
Mr. Venkatakrishnan (Venkat) joined as
Whole-Time Director and CEO of Vedanta
Limited on March 1, 2019. He is the CEO
and a member of the Board of Directors
of Vedanta Resources Limited effective
from August 31, 2018. He has been CEO
of Johannesburg-based AngloGold
Ashanti Limited. During his tenure, he has
had significant success, delivering major
projects on time and on budget improving
productivity, strengthening the balance
sheet, reducing operating and overhead
costs, and improving overall safety and
sustainability performance.
Prior to his appointment as CEO in May
2013, Venkat was AngloGold Ashanti's
Chief Financial Officer, a post he held
since 2005. Before that, between 2000
and 2004, he was CFO of London-listed
Ashanti Goldfields Limited. Venkat has
accumulated extensive experience
throughout his career in the UK, India,
Africa, Australia and South America. He is a
qualified Chartered Accountant who holds
a Bachelor's degree from the University of
Madras.
ARUN KUMAR GR
Whole-Time Director & CFO
Mr. Arun Kumar has over 23 years of
experience at global multinationals like
Hindustan Unilever and General Electric.
Prior to his joining Vedanta, he was the
CFO for General Electric’s Asia-Pacific
Lighting & Appliances businesses based
out of Shanghai. He is responsible for
overall health of the 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. He is a Fellow Member
of the Institute of Chartered Accountants
of India.
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59
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Executive committee
SRINIVASAN VENKATAKRISHNAN
Whole-Time Director &
Chief Executive Officer
ARUN KUMAR GR
Whole-Time Director &
Chief Financial Officer
SUNIL DUGGAL
Chief Executive Officer- HZL
Mr. Arun Kumar has over 23 years of
experience at global multinationals like
Hindustan Unilever and General Electric.
Prior to his joining Vedanta, he was the
CFO for General Electric’s Asia-Pacific
Lighting & Appliances businesses based
out of Shanghai. He is responsible for
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. He is a Fellow Member
of the Institute of Chartered Accountants
of India.
Mr. Venkatakrishnan (Venkat) joined as
whole-time director and CEO of Vedanta
Limited on March 1, 2019. He is the CEO
and a member of the Board of Directors
of Vedanta Resources Limited effective
from August 31, 2018. He has been the
CEO of Johannesburg-based AngloGold
Ashanti Limited. During his tenure, he has
had significant success, delivering major
projects on time and on budget improving
productivity, strengthening the balance
sheet, reducing operating and overhead
costs, and improving overall safety and
sustainability performance. Prior to his
appointment as CEO in May 2013, Venkat
was AngloGold Ashanti's Chief Financial
Officer, a post he held since 2005. Before
that, between 2000 and 2004, he was
CFO of London-listed Ashanti Goldfields
Limited. Venkat has accumulated
extensive experience throughout his
career in the UK, India, Africa, Australia and
South America. He is a qualified Chartered
Accountant who holds a Bachelor's degree
from the University of Madras.
Sunil Duggal was appointed as the Chief
Executive Officer and Whole-Time Director
of HZL in October 2015. He was also given
the responsibility of leading the Base
Metal Group comprising of zinc, copper
and iron ore businesses. Prior to this, he
was Executive Director from August 2010
to April 2012, Chief Operating Officer
for over two years before being made
Deputy Chief Executive Officer from April
2014. He has over 32 years of experience
of leading high performance teams and
more than 19 years in leadership positions.
He also serves as Vice Chairman of the
International Zinc Association, President
of the Indian Lead Zinc Development
Association, Chairman of FIMI Non-Ferrous
Metals Committee and co-chair of the
FICCI Non-Ferrous Metals Committee
2017. Recently, he has been appointed
as Chairman of the Skill Council for
Mining Sector, India. Sunil Duggal holds a
Bachelor’s degree in Electrical Engineering
from the Thapar Institute of Engineering
and Technology, Patiala. He has
participated in a leadership development
and management development
programme at the International Institute
for Management Development, Lausanne,
Switzerland and the Indian Institute of
Management, Kolkata, India.
60
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT AJAY KUMAR DIXIT
Chief Executive Officer (Acting) –
Oil & Gas Business
AJAY KAPUR
Chief Executive Officer – Aluminium &
Power Business
MADHU SRIVASTAVA
Chief Human Resources Officer
Ajay Kumar Dixit was appointed as the
Acting Chief Executive Officer of our Oil &
Gas business on 5th April, 2019. Prior to his
role as CEO of the Oil & Gas business, he
was the Chief Executive Officer of Alumina
and Power from February 2017 to April
2019. He was appointed as interim Chief
Executive Officer of Aluminium & Power
from November 2018 to February 2019.
He joined the Group as Chief Executive
Officer of our Power business in May
2015 and has 39 years of experience in
the power industry. Prior to this, he was
the Chief Executive Officer of Energy
with Siemens, responsible for the overall
operations of South Asia. He has a wide
experience in the entire energy chain
comprising power generation, automation,
transmission and distribution. He also has
experience in manufacturing and setting
up plants in South Asia, Middle East and
Africa. Ajay holds a Bachelor’s degree in
Electrical Engineering from Delhi College
of Engineering.
Ajay Kapur was appointed as Chief
Executive Officer, Aluminium & Power in
March 2019. Ajay leads the Aluminium &
Power business for Vedanta comprising of
2.3mtpa installed smelter capacity, 8GW of
Power and 2mtpa of Alumina refinery. Prior
to his appointment at Vedanta Limited,
Ajay was Managing Director & Chief
Executive Officer for Ambuja Cements. He
started his career as an Executive Assistant
to the founder & Managing Director.
He went on to handle various strategic
positions at Ambuja cements with his last
position as Managing Director & Chief
Executive Officer. He holds a graduate
degree in Economics from St. Xavier’s
College, Mumbai, an MBA from KJ Somaiya
Institute, Mumbai and is an alumnus
of Wharton’s Advanced Management
Program.
Madhu Srivastava was appointed as
the Chief Human Resources Officer for
Vedanta Group in December 2018. She has
been associated with the Group for more
than six years and in her earlier role, she
was the CHRO for Cairn Oil & Gas business
and led the Talent Acquisition and Diversity
& Inclusion functions for the Group.
Under her leadership, the Group has put
in place the right HR policies, progressive
people practices and frameworks for
talent acquisition and talent management
across Vedanta. Madhu has 20 years of
experience across HR as well as Sales,
Marketing and Operations, spanning the
FMCG, telecom, ITES, BFSI and natural
resources industries. Madhu started her
professional journey in 1999 with Godrej
where she handled sales in Gujarat and
Maharashtra and later moved to the
Corporate Sales & Marketing role. Post
working with companies like GE Capital
and Reliance in Operations & Marketing
profiles, she started her Human Resources
journey in 2006 by joining Genpact as
Assistant Vice President, Talent Acquisition
where she led middle management hiring.
She then went on to lead the recruitments
for Citibank’s India operations as Vice
President, HR before joining Vedanta in
2012. Madhu has completed her PGDM
in marketing and sales, from the IIM,
Ahmedabad.
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61
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Executive committee
Continued
DILIP GOLANI
Head – Management Assurance
RAJAGOPAL KISHORE KUMAR
Director – Strategy & Business
Development
PHILLIP TURNER
Head – Health, Safety, Environment
and Sustainability
Dilip Golani currently heads the Group’s
Management Assurance Services function.
He previously headed the Sales and
Marketing Division for HZL and the Group’s
performance management function.
Prior to joining the Group in April 2000,
Dilip Golani was a member of the Unilever
corporate audit team responsible for
auditing the Unilever group companies in
Central Asia, Middle East and Africa region.
Prior to that, he was responsible for
managing operations and marketing
functions for one of the exports
businesses of Unilever India. He has
over 30 years of experience and has
previously worked with organisations
such as Union Carbide India Limited
and Ranbaxy Laboratories Limited. Dilip
holds a Bachelor’s degree in Mechanical
Engineering and has completed his post-
graduate studies in Industrial Engineering
and Management from the National
Institute of Industrial Engineering, Mumbai,
India.
Phillip Turner was appointed as Head
of Group Health, Safety, Environment
and Sustainability with effect from July
2017. He joined us as Head of Group
Health and Safety in September 2014.
He has over 38 years of experience
within mining, heavy engineering and
manufacturing organisations. He was
previously General Manager of Risk and
Sustainability at JK Tech Pty Limited,
Australia. He has also held a number of
senior corporate and operational roles at
Rio Tinto Group, Australia, Canada and
United Kingdom including responsibility
for health, safety, environment and
sustainability assurance. He has held
senior roles at mining companies, North
Limited and at BHP Petroleum’s offshore
operations. He has a Master of Applied
Science in Risk Engineering from Ballarat
University, Australia, a Bachelor’s degree in
Science from Deakin University, Australia,
a graduate Diploma in Occupational
Hygiene from Deakin University, Australia
and a graduate Diploma in Occupational
Hazard Management from Ballarat C.A.E.
Rajagopal Kishore Kumar was appointed
as the Director of Strategy and Business
Development effective January 17, 2018.
Prior to this, he was the Chief Executive
Officer of our Iron Ore Business from
February 2, 2015 and the Chief Executive
Officer (Base metals) Africa with Konkola
Copper Mines Plc, Zinc International
business and CMT since August 2013. He
was previously appointed as the Chief
Executive Officer of our Zinc International
Division with effect from February 2011.
Prior to this, he headed our copper
business at Konkola Copper Mines Plc
from 2008 and Sterlite Copper India
Limited from 2006. He has more than
34 years of experience in accounting,
marketing, supply chain management,
mergers and acquisitions and business
turnaround. Rajagopal joined our
Company in April 2003 as Vice President
of Marketing for HZL and became Senior
Vice President of Marketing for our Copper
Division from June 2004 to December
2006, where he was responsible for
copper marketing and concentrate
procurement. Prior to joining our
Company, he was employed by Hindustan
Unilever Limited for 12 years. Rajagopal
holds a Bachelor’s degree in commerce,
Kolkata University and is a member of
the Institute of Chartered Accountants of
India.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT M SIDDIQI
Head – Projects
SURESH BOSE
Director – Chairman & CEO Office
SCOTT CAITHNESS
Director – Exploration
Mansoor Siddiqi was appointed as the
Group Director incharge of projects
in September 2011 and has been with
Vedanta in a contracting capacity since
February 2017. He was formerly Chief
Executive Officer, Aluminium and led
the establishment 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. Mansoor joined
our Group in 1991. Prior to joining us, he
held senior positions at Hindustan Copper
Limited and has 43 years of experience
in various areas of operations and project
management. Mansoor holds a Bachelor’s
degree in Technology from the Indian
Institute of Technology, Delhi, and a
postgraduate Diploma in Management
from the All India Management
Association, Delhi.
Suresh Bose was appointed as the Director -
Chairman & CEO Office in December 2018.
Prior to this role, he headed the Human
Resources function of Vedanta Group
from September 2015. Suresh Bose has 27
years of extensive experience in human
resources, 17 of which have been with
the Vedanta Group where he has worked
across different business units (including
aluminium, copper and corporate) in
human resource specialist roles. Prior
to joining Vedanta Limited, Suresh was
associated with HMT Limited, Larsen &
Toubro Limited, Ford India Private Limited
and Mahindra & Mahindra Limited. He also
brings international human resource work
experience of four years from Armenia
Gold Recovery Company, Armenia. Suresh
has a dual Master’s degree in Personnel
Management and Industrial Relations from
Tata Institute of Social Sciences, Mumbai
and the Institute of Social Studies, Hague,
Netherlands.
Scott Caithness has over 35 years of
experience within the exploration industry
and was appointed Director of Exploration
for Vedanta in September 2017. Prior to
this, he was the Head of Exploration for
HZL from November 2015. Immediately
before joining the Group, he co-founded
and was the Managing Director of Indian
Pacific Resources Limited, an unlisted
Australian exploration company. He spent
18 years with Rio Tinto Exploration in
various senior corporate and operational
roles in Australia, Papua New Guinea and
India, which included the establishment of
Rio Tinto’s first exploration office in India.
In addition, Scott has held senior roles at
Indophil Resources NL and the Australian
Trade Commission. He was previously
Head of Exploration for Vedanta from
September 2004 to November 2006.
Scott has a Bachelor’s degree of Applied
Science in Geology from RMIT University
in Melbourne, Australia.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
63
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Executive committee
Continued
LAXMAN SHEKHAWAT
Director – Operations,
Hindustan Zinc Limited
NAVEEN KUMAR SINGHAL
Chief Executive Officer –
Iron Ore Business
DESHNEE NAIDOO
Chief Executive Officer –
Zinc International
Laxman Shekhawat was appointed as
the Director – Operations of Hindustan
Zinc Limited in February 2019. He holds
a Bachelor's in Engineering in Mining and
has been associated with HZL since 1990.
Laxman brings 28 years of rich experience
and has served in various leadership
positions for more than a decade. He
has been instrumental in developing
and executing strategies to unlock the
full potential of mines and bring the best
practices to the mining portfolio. He has
also been awarded with the prestigious
“National Geoscience Award” by the
Hon’ble President of India in 2017.
Naveen Kumar Singhal was appointed
as the Chief Executive Officer of our
Iron Ore Business effective February 6,
2018. Naveen Kumar Singhal has over
three decades of experience, 22 years of
which have been in the natural resources
arena handling various portfolios in
metals and mining and cement industry.
He joined Vedanta in 2003 and has
been instrumental in driving the growth
projects in HZL from conceptualisation
to commissioning through the best-in-
class mining and smelting technologies,
mechanisation and automation alongside
effective stakeholder management. Prior
to joining Vedanta, he had served in
leadership roles at Swaraj Mazda Limited,
Jay Engineering Company Limited and
Andhra Cements Limited. Naveen Kumar
Singhal has played a pivotal role in the
areas of supply chain management,
assets acquisition, business turnaround
strategy, general management and project
management. Naveen has a Bachelor’s
degree in Mechanical and Industrial
Engineering from the Indian Institute of
Technology, Roorkee, Uttarakhand and
a Postgraduate Diploma in Industrial
Engineering and Management from the
National Institute of Industrial Engineering,
Mumbai, Maharashtra.
Deshnee Naidoo was appointed as Chief
Executive Officer of Zinc International
and Copper Mines of Tasmania (CMT)
in February 2015. She also held the role
of Chief Executive Officer of Africa Base
Metals for a period in 2018-19. Deshnee
Naidoo has over 21 years of
experience in the resources industry
including platinum, thermal coal and
manganese. Prior to joining the Group,
she was with Anglo American as Chief
Financial Officer of Thermal Coal in South
Africa. She had previously held various
technical and commercial positions across
Anglo American. She was awarded the JCI/
Anglo Platinum bursary in 1994 to receive
a Bachelor’s degree in Science (Chemical
Engineering) at the University of Natal,
Durban, South Africa. She joined Anglo
American in 1998 as a trainee metallurgist
at the precious metals refinery and over
a 16-year span she held various roles
including process engineering (corporate
office), process control, strategic long-
term planning, corporate finance, Chief
Executive Officer’s office and Chief
Financial Officer of thermal coal at Anglo
American where her responsibilities
included management of two commodity
groupings (thermal coal and manganese)
across three regions (South Africa, South
America and Australia).
64
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT PANKAJ KUMAR
Chief Executive Officer –
Sterlite Copper
PANKAJ MALHAN
Deputy Chief Executive Officer –
Electrosteel Business
ABHIJIT PATI
Chief Executive Officer –
Aluminium, Jharsuguda
Pankaj Kumar was appointed the Chief
Executive Officer of our copper operations
in Tuticorin, Silvassa and Fujairah Gold FZC
and Director of MEL in March 2019. In his
career span of over 26 years, Pankaj has
worked with large conglomerates like Tata
Steel, Mittal Steel, Adani ports, Gujarat
Guardian Limited and United Breweries
Limited. Prior to joining us, at Sterlite
Copper as Chief Executive Officer, he was
the Chief Operating Officer of Hindustan
Zinc Limited. Pankaj holds a Bachelor’s
degree in Technology (Hons.) from IIT
Kharagpur and a Postgraduate Diploma
in Business Management specialising in
Operations Management & IT from XLRI
Jamshedpur.
Pankaj Malhan is the Deputy Chief
Executive Officer of ESL. Pankaj joined
ESL from Tata Steel, where he was
working as Head – Engineering & Project
at Jamshedpur. In that role, he was
responsible for leading Tata Steel’s capital
expansion programme in the area of iron
making. He has been associated with Tata
Group since 2000 and has held various
senior management positions at Tata Steel,
Tata Blue Scope Steel Limited and Tata
power Limited. Prior to joining Tata Group,
he worked with Indian Acrylics Limited and
Fisher Rosemount Limited. Pankaj joined
ESL in October, 2018 and holds a B.Tech
in Instrumentation and Control from NIT,
Jalandhar, and a Diploma in Business
Management from XLRI, Jamshedpur.
Abhijit Pati was appointed as Chief
Executive Officer of our Aluminium
business, Jharsuguda in March 2015. Prior
to this role, he was the President and Chief
Operating Officer of our Aluminium and
Power business at Odisha from April 2012.
He has over 30 years of experience in the
aluminium industry. Prior to joining us,
he was the Vice President with Hindalco
Industries Limited. He started his career as
a budding engineer with Indian Aluminium
Company in 1989. He was awarded with
the ‘Exceptional Contributor Award’
from the Aditya Birla Group Chairman,
Mr. Kumar Mangalam Birla for significant
contribution to turnaround Hirakud
Aluminium Smelter in the year 2006
and won the prestigious British Sword of
Honor for the Hirakud Smelter in 1999.
He is a member of the Bureau of Energy
Efficiency under Ministry of Power, GoI. He
also holds the position of Vice President
at the Aluminium Association of India and
a member of its governing body. He is a
two-times gold medallist from prestigious
institutes such as Calcutta University
and International Management Institute,
New Delhi. Abhijit Pati has a First class
honours Bachelor’s degree in Chemical
Engineering from Calcutta University and
a Master’s in Business Administration from
International Management Institute, New
Delhi.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
65
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Executive committee
Continued
VIKAS SHARMA
Chief Executive Officer –
BALCO
RAHUL TRIVEDI SHARMA
Chief Executive Officer (Acting) –
Alumina
Vikas Sharma was appointed the Chief
Executive Officer of BALCO in March 2017.
Vikas Sharma has experience of over 30
years in various national and multi-national
companies. He has experience of serving
HMT Watches Limited, Su-Raj Diamonds
India Private Limited, AMP India Private
Limited (now Tyco Electronics), Praxair
India Private Limited, Jindal Praxair Oxygen
Company Limited and JSW Steel Limited
in various key positions. Vikas Sharma
joined Vedanta Group as Location Head
of Chanderiya of Hindustan Zinc Ltd in
2012 and was gradually elevated to be the
Chief Operating Officer of the Smelters
Division of HZL in June 2014. During
his tenure at HZL, he played an integral
role in the growth of the Company and
made significant contribution in smelter
production. Vikas holds a Bachelor’s
degree with Honours in Mechanical
Engineering from the Engineering College
Kota, University of Rajasthan and a Master’s
in Business Administration in Marketing
from Sikkim Manipal University, Gangtok,
India.
Rahul Sharma joined the Vedanta Group in
1998, and is currently the Chief Executive
Officer of Alumina Business, effective April,
2019, prior to which he was working as
Director of Corporate Strategy (Aluminium
& Power). Rahul is leading the growth and
expansion of the Lanjigarh refinery in
Odisha to 6mtpa.
He has a varied experience of over 25
years and has held various leadership
positions at Vedanta Limited and Sterlite
Technologies Ltd. Prior to joining Vedanta,
he was the Chief Marketing Officer
(Domestic & International) and Business
Head-Integrated Management System at
Sterlite Technologies Ltd.
He has played a significant role in driving
various policies and creating a strategic
framework for various government reforms
for development of exploration, mining
and non-ferrous metal sector in the
country in the most sustainable manner.
Rahul is an alumnus of IIM–A’s Executive
General Management program, and has an
MBA in Marketing and a B.E. in Electronics
& Communication.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STRATEGIC REPORT We continue to
consolidate our
position as one of
the largest diversified
natural resource
businesses in the
world
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
67
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Market review
Channelling market opportunities for growth
GLOBAL ECONOMY AND
COMMODITY MARKETS
After a strong growth in 2017 and early
2018, global economic activity slowed
notably in the second half of last year,
reflecting a confluence of factors affecting
major economies. China’s growth declined
following a combination of required
regulatory tightening to rein in shadow
banking and due to an increase in trade
tensions with the United States. The
Eurozone economy lost more momentum
than expected as consumer and business
confidence weakened. Trade tensions
increasingly took a toll on business
confidence with financial conditions
tightening for both emerging and
advanced economies, weighing on global
demand.
As a result, global growth is now projected
to slow from 3.6% in 2018 to 3.3% in 2019 as
per the International Monetary Fund (IMF)..
The current forecast envisages that global
growth will level off in the first half of 2019
and then firm up after that. The projected
pickup in the second half is predicted due
to an ongoing build-up of policy stimulus in
China, recent improvements in global
financial market sentiment and a gradual
stabilisation of conditions in the stressed
emerging markets.
Commodity prices rebounded in the first
quarter of 2019 from a decline in the fourth
quarter of 2018, which had followed an
even steeper decline in the preceding
quarters. The price increase reflected
supply concerns, progress in trade
negotiations between US and China and
fiscal stimulus in China. Metal prices are
expected to continue rebounding from
2018 troughs. Most base metals prices face
upside risks from the possibility of tighter
than expected environmental policies and
slower than expected easing of commodity
-specific supply bottlenecks. Oil prices
have risen significantly since the start of
the year amid a production cut by OPEC
and other producers and supply
disruptions elsewhere.
OPPORTUNITIES FOR VEDANTA
Improved momentum for emerging and
developed economies is projected to
continue into 2020, primarily reflecting
developments in economies currently
experiencing macroeconomic distress.
Growth prospects for advanced
economies are likely to plateau somewhat
over the medium term, sustained by an
increase in the relative size of economies
such as China and India, which are
projected to enjoy robust growth. This
stable global growth is expected to lead to
higher demand for metals and oil.
At the same time, supply-side dynamics on
zinc are expected to keep its price stable to
higher. The zinc market is going through a
cyclical shortage with refined metal
expected to stay in short supply over the
next two to three years as smelters are at
full capacity and Chinese smelting
capacities are restrained. With no new
projects coming online, the market could
possibly see concentrate supply issues in
the medium term. All this provides Vedanta,
a large zinc producer, with a favourable
market as we ramp up production.
Recent developments for the alumina
refinery companies, bringing the price of
alumina down, provide Vedanta with a cost
advantage in its aluminium business. As we
ramp up our refinery, in the interim period
where we remain dependent on imported
alumina supply, lower alumina costs will
help us keep our aluminium costs under
control.
Thus, Vedanta’s diversified portfolio and
attractive basket of commodities position
us well to take advantage of this projected
uplift in demand, and the resulting
improvement in price outlook.
Below: We focus on implementing
new technologies at our site locations
"The backdrop of
positive Indian
economic growth,
combined with
supportive government
policies, will strengthen
commodity demand in
India going forward and
support domestic
production."
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE INDIAN ECONOMY
India is Vedanta’s main market and we
believe it has a huge growth potential.
According to the latest IMF Report, India’s
growth is projected to rise to 7.3% in 2019
and 7.5% in 2020, supported by the
continued recovery of investment, and
robust consumption amid a more
expansionary stance of monetary policy
and some expected impetus from fiscal
policy. Over the medium term, the IMF
expects growth to stabilise at just under
7.75%, based on continued implementation
of structural reforms and easing of the
infrastructure bottleneck.
The Government has been proactive in
introducing major policy reforms for the
technology and manufacturing sectors,
and in our specific areas of operation we
have seen the introduction of theNational
Mineral Policy 2019, Hydrocarbon
Exploration and Licensing Policy (HELP)
and the Open Acreage Licensing Policy
(OALP). The Government’s focus on rural
development and job creation, well
supported by initiatives such as Make in
India and Digital India, have also provided
impetus to the economic growth of the
country. External confidence in the Indian
economy has also been boosted by
structural reforms to improve the ease of
doing business, strengthen the banking
system and improve the capital markets.
In the oil sector, the Hydrocarbon
Exploration and Licensing Policy (HELP),
aimed at enhancing domestic oil & gas
production, has brought substantial
investment into the sector and generated
sizeable employment opportunities since
its implementation. The Open Acreage
Licensing Policy (OALP), a critical part of
the HELP, enables contractors to explore
conventional as well as unconventional oil
& gas resources on a revenue-sharing basis
with marketing and pricing freedom for the
crude oil and natural gas produced.
Vedanta Limited won 41 out of 55 oil & gas
exploration blocks offered in OALP-1
bidding in 2018.
Foreign direct investment (FDI) in the
mining sector, the exploration of metal and
non-metal ores and the approval of the
MMDR Bill (2011) will provide a more
supportive legislative environment for
investment and technology going forward.
In addition, in the Union Budget 2018/19,
the Government added a surcharge of 10%
on aggregate duties of customs on
imported goods to strengthen the
domestic mining industry.
This backdrop of positive Indian economic
growth, combined with supportive
government policies, will strengthen
commodity demand in India going forward
and support domestic production.
Vedanta, as one of the country’s largest
natural resources companies, is uniquely
positioned to leverage India’s growth
potential by catering to that demand
across its diversified portfolio of
commodities. With such a large domestic
market, everything we produce in India, we
would like to sell in India.
OPPORTUNITIES FOR VEDANTA
India-focused growth agenda
The Indian economy remains one of the
fastest growing in the world, supported by
strong macroeconomic fundamentals and
policy changes. This growth could be
attributed to the sustained rise in
consumption and a gradual revival in
investments, especially with a greater focus
on infrastructure development. Together
with economic reforms, these augur well
for a healthy growth path for the economy.
Positive demographic factors such as an
increasing workforce and urbanisation are
driving a greater need for infrastructure
development. Looking ahead, we expect to
see continued focus in the infrastructure,
transportation and power sectors. This will
lead to a rising demand for domestically
produced metals. Additionally, there is
huge scope of growth in India’s
significantly low per-capita consumption of
all metals including zinc, aluminium, steel
and copper when compared to the global
average. Indeed, oil consumption in India is
less than one-third that of the global per
capita figure, providing immense
opportunities for growth to the domestic
producers.
POLICY SUPPORT
The Indian Government has recently
announced various policy measures to
support the metals, mining and oil sectors.
The Union Cabinet approved the National
Mineral Policy (NMP) 2019, which aims to
bring more effective regulation while
addressing the issues of those affected by
mining. The policy is progressive and seeks
to liberalise the sector by opening up
opportunities to the private sector that
were previously reserved for state-owned
enterprises. The policy measures envisage
that mineral production in India will grow
by 200% and the trade deficit in minerals
will reduce by 50% in the next seven years.
Furthermore, efforts will be made to
benchmark royalties and taxes (which are
high in India) with mining jurisdictions
elsewhere in the world in order to attract
more investment and guarantees that
statutory clearances are granted in a
timely manner.
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Market review
Continued
ZINC
Investments in infrastructure drive
zinc demand
In a year of volatility, zinc prices fell by
approximately 17% to end the year at
US$2,922 per tonne, after peaking at
US$3,540 per tonne in February 2018.
Macro-economic factors including fears of
a trade war and a slowdown in global
economic growth contributed to this fall.
However, in Q4, the apparent easing of
trade tensions, and production disruptions
as a result of floods in Australia
accompanied by steep drawdowns in
inventories, helped prop up zinc prices.
Price increases since then have largely
reflected robust demand from China,
which accounts for half of global
consumption. Against the backdrop of
rapidly growing zinc ore production,
smelter capacity constraints have driven
refining fees (zinc concentrate treatment
charges) to near record highs.
Products & customers
Vedanta is the largest zinc producer in
India, with a 79% market share in FY2019.
Between 70-74% of the refined zinc
produced is sold in the Indian market,
primarily to steel companies, with the rest
being exported to mainly Asian countries
and the Middle East to increase the
customer portfolio in special high-grade
and value-added products. 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 oxides and chemicals. This
year we have successfully launched and
supplied EPG (electro-plating galvanising)
and HZDA (Hindustan Zinc die-casting
alloy). Our focus is on increasing the supply
of value-added products to 25% of total
zinc sales in FY2020, from 16% in FY2019.
Vedanta Zinc’s international operations
produce refined zinc, which is sold within
Africa and exported to Europe and China
and concentrate which is exported to
traders and refiners internationally.
Market drivers & opportunities
Zinc market fundamentals remain robust
with global zinc consumption expected to
grow by 1.5% to 14.5 million tonnes in 2019,
while smelter supply will increase to 14
million tonnes and mine supply will likely be
13.9 million tonnes. The growth in
consumption in 2019 will mainly come from
China and India, as the consumption rate is
expected to be low in the US, Europe and
Japan due to weak demand, trade tensions
and a slowdown in the automotive sector.
International trade talks will also have a
significant bearing on investor sentiment
and consequently on zinc prices going
forward. Despite a fundamentally tight zinc
metal market, prices may struggle if trade
tensions continue.
Primary zinc consumption in India has
been steady for the last two years and we
may see a rise in consumption of 3-4%
going forward. Steel demand in India is
forecast to increase at 6.5% CAGR until
2030. Indian zinc demand is expected to
mirror this growth trajectory on the back of
growth in its major end-use sectors, i.e.
automotive, construction, infrastructure
and railways. The Government’s plan to
spend US$1.5 trillion on infrastructure over
the next decade, in the form of new and
upgraded railway stations, new airports,
road projects, smart cities, electrification
projects, renewable energy installations
and investment in transmission corridors,
will provide a long-term boost to Indian
zinc demand.
As most of our zinc is produced and sold in
the Indian market, ongoing investment by
the Indian government will be the main
opportunity for Vedanta going forward.
The International Zinc Association is
working with government departments to
increase zinc consumption in automobiles
and railways, thereby bringing more safety
and sustainability to the sectors.
LEAD
Demand continues to grow but the
outlook is less certain
In line with zinc and other base metals, the
lead price was volatile during the year in
response to developments in the trade
dispute between the US and its trading
partners. The price dropped from around
US$2,544 per tonne in early January 2018
and ended the calendar year at US$2,009
per tonne. Fundamentally, the lead market
was favourable with stocks dropping to
record lows and limited supply. Lead prices
are projected to gradually increase over the
remainder of 2019. More stringent
environmental regulations in China
restricting the recycling of lead scrap
materials, which accounts for more than
two-fifths of total refined production,
presents an upside risk to the forecast.
Over the medium term, a shift towards
electric vehicles is likely to depress
demand for lead, which is heavily used in
batteries for internal combustion engine
vehicles but not in electric vehicles.
Products & customers
In India, Vedanta owns and operates a fully
integrated zinc-lead production facility and
is one of the world’s largest integrated
zinc-lead producers by volume of those
producing only primary metals. The main
use for our lead is in lead acid batteries,
mainly serving the automotive and telecom
sectors. India consumes around 1.1 million
tonnes of lead annually, which includes
both primary and secondary lead. HZL has
a 57% market share of domestic primary
lead consumption. HZL’s domestic lead
supplies increased by 12% in FY2019
against market growth of an estimated 3%.
Market drivers & opportunities
Demand for lead is expected to increase
by 2% this year primarily due to growth in
Asia and especially China. HZL is poised
to expand its supply base to more
end-users, tapping the growth that will
be driven by growing production in the
automotive sector.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW In 2018, we saw an increase in the pace of
implementation of the Open Acreage
Licensing Policy (OALP) in the Indian oil &
gas sector, with the launch of the second
and third rounds offering 14 and 23 blocks,
respectively. In addition, to boost domestic
production and provide greater energy
security, the Government has introduced a
range of new policies aimed at facilitating
business and attracting investment.
While global demand is expected to
stagnate due to the global economic
slowdown and mounting trade tensions,
Indian demand is projected to show robust
growth, thereby presenting opportunities
in the oil & gas value chain.
As a result of the 2018 award of 41 OALP
blocks, Vedanta has expanded its footprint
to all the major sedimentary basins of India.
With a strengthened growth pipeline in
exploration and development, the
Company is well positioned to meet this
increased Indian demand by producing
half of the country’s crude oil in the
coming years.
SILVER
OIL & GAS
Demand hit as China reduces
subsidies
In a challenging environment, the silver
price averaged US$15.7 per ounce in
CY2018. Preliminary estimates point
towards a slight increase in total supply in
2018 whereas demand contracted by 3%,
primarily due to lower demand from
investors. A slowing Chinese economy,
coupled with rising US interest rates, an
equity market bull run, and global trade
tensions affected the price of many
commodities, including gold and silver.
Products & customers
Hindustan Zinc is India’s only primary silver
producer and ranks 9th globally in terms of
the top silver producing companies. We
cater to markets including the industrial
sector (electrical contacts, solder and
alloys, and pharmaceuticals), and the
jewellery and silverware manufacturing
segment. Our focus is to improve
penetration in the domestic market by
increasing value-added products such as
silver nitrate and silver powder.
Market drivers & opportunities
Silver prices are projected to remain
broadly unchanged in 2019 according to
the World Bank’s commodity outlook.
Jewellery demand and silverware
fabrication are rising moderately whereas
industrial demand for silver, which
accounts for more than half of total
demand, remains weak. Tariffs on solar
imports to the United States led to a
reduced use of silver in solar panels in
2018, and this trend is expected to persist.
The use of silver in photovoltaics is
expected to decline as it is one of the most
expensive components.
Indian demand is projected to show
robust growth
We saw a year marked by supply-demand
fluctuations in 2018, leading to higher than
usual volatility and uncertainty in the oil &
gas markets. The year saw unprecedented
production from the US, production cuts
announced by the Organisation of the
Petroleum Exporting Countries (OPEC) and
US sanctions imposed on Iran and
Venezuela. After peaking at US$85 per bbl,
Brent averaged US$70.7 per bbl in CY2018.
Products & customers
Vedanta is the largest private sector
producer of crude oil in India. Our crude is
sold to hydrocarbon refineries and our
natural gas is used by the fertiliser industry
and the power generation sector in India.
Market drivers & opportunities
The shale gas revolution will continue to
disrupt the oil & gas sector. The US closed
out 2018 as the world’s largest producer of
crude oil and is projected to become a net
exporter by 2020. Robust shale growth will
take US production to an average of 12.4
million bpd in 2019 and 13.2 million bpd in
2020, which will exert downward pressure
on oil prices.
India currently meets 83% of its oil
consumption and 46% of its gas
consumption through imports. The Indian
Government projects a 10% reduction in
India’s imports of oil & gas by 2022. India
remains underexplored, with only seven of
the 26 sedimentary basins currently
producing oil & gas. Further, re-assessment
of India’s resource base has increased the
country’s total hydrocarbon resources (in
place) by close to 50%, of which
approximately 71% remain undiscovered,
providing significant growth opportunities.
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Continued
ALUMINIUM
Expanding capacities in smelters and
refinery
2018 was an eventful year in the global
aluminium industry, with the imposition of
US tariffs on imported aluminium,
sanctions on Rusal, production disruptions
at Alunorte’s Brazil operations and weaker
domestic demand growth in China. As a
result, aluminium prices were extremely
volatile. Prices on the London Metal
Exchange fell 23% in the second half to
US$1,800 per tonne from US$2,290 per
tonne in May 2018.
Sanctions imposed on the Russian
aluminium producer Rusal in April 2018
were lifted in January 2019. A production
embargo on the world’s largest alumina
refinery, Alunorte in Brazil (which accounts
for 10% of global alumina supply excluding
China), due to alleged environmental
breaches was lifted although the
resumption of full production is still
awaiting federal court approval. Aluminium
production and smelter capacity is
expanding cautiously in China where
environmental curbs are a little less
stringent than expected. Aluminium prices
may remain range bound in 2019,
depending on the utilisation of capacities
in China.
Products and consumers
Vedanta has the largest integrated smelter
in India with 2.3mtpa proposed capacity
and is the market leader in primary
aluminium with a 37% market share. Our
product range includes ingots, primary
foundry alloys, wire rods, billets and rolled
products.
POWER
In FY2019, 30% of our sales were to the
Indian market, specifically for use in the
construction, electrical and transportation
industries. This was lower than in previous
years as India saw a surge in imported
aluminium in 2018.
Growth in Indian demand driving
capacity increases
Vedanta operates a 9GW diversified power
portfolio in India consisting of 96% thermal
power and 4% from renewable energy
sources.
Vedanta boosted its sales to Japan and
South-East Asia in 2018. International sales
to our established customer base in other
key Asian, European and North and South
American markets also grew, increasing by
30% to 1.3 million tonnes this year.
Market drivers and opportunities
The domestic demand for aluminium in
India is expected to benefit from the
infrastructure projects prioritised by the
Government. The automotive and food
packaging industries are also expected to
stoke aluminium growth. Furthermore,
rapid urbanisation should augment
consumer demand; yet another positive
for the sector. Moreover, the per capita
aluminium consumption is far below
the global average. This offers huge
potential, given our demographic and
economic outlook.
With a production capacity of 2.3 million
tonnes, Vedanta is in pole position to take
advantage of these opportunities.
India is the third largest electricity producer
in the world. The electricity generation
target for conventional sources for the
FY2019 has been fixed at 1265 billion units
(BU) which represents growth of 4.87%
over the previous year FY2018. Between
2010 and 2018 electricity production in
India grew at a CAGR of 5.69%, driven by
government initiatives and schemes to
increase electrification across rural India.
Since last April all villages in India have had
an electricity connection.
Products and consumers
Of Vedanta’s power portfolio, 37% is used
for commercial power while 63% is for
captive use. Nearly 95% 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 691TWh in 2007 to
1894.7TWh by 2022, at a CAGR of 7%,
driven predominantly by the expansion in
industrial activities, a growing population,
rising per capita incomes, policy support
and increasing electricity penetration. The
Government has also been supportive of
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MANAGEMENT REVIEW
growth in the power sector, delicensing the
electrical machinery industry and allowing
100% Foreign Direct Investment (FDI). From
April 2000 to June 2018, total FDI in the
sector was US$14.18 billion of which
US$6.84 billion was invested in non-
conventional sources. In the wake of
surging domestic coal production, the
country’s power sector is becoming
increasingly stable. 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 December 2018, India had total
installed capacity of 349GW, of which
thermal constituted 223GW, nuclear 7GW,
hydro 45GW and renewables 74GW. Total
captive power installed capacity stood at
84GW India currently has a demand/supply
gap of around 7.5% and is targeting an
additional 58GW of conventional power by
2022. The target for renewable energy has
also been increased to 175GW by 2022, of
which 100GW will be produced through
solar power. Vedanta’s power portfolio is
well positioned to capitalise on India’s
growing demand for power.
IRON ORE
Iron ore prices lift in the last quarter
of 2018
The Platts 62% Fe CFR North China Index
– the price at which most iron ore across
the globe is sold – rallied by 9% y-o-y in Q4
to average US$71.4 per tonne. The price,
which was sluggish over 2018 compared to
rising steel and high-grade iron ore prices,
has increased owing to various factors
including a delay in implementing China’s
winter production cuts, temporary
weather-related disruptions in Australia and
safety outages in Brazil. The price was also
supported by falling steel margins, which
reduced the incentive to use high-grade
ores in steel production.
Products and consumers
Iron ore is a key ingredient in steel, which is
ultimately used in the construction,
infrastructure and automotive sectors.
Our iron ore mining operations ceased in
Goa from March 2018, pursuant to the
Supreme Court order. Meanwhile, the
permitted mining capacity at Karnataka
has recently been increased to 4.5 million
tonnes from the previous 2.29 million
tonnes.
Market drivers and opportunities
Unexpected events impacted the sector
during the year. The major tropical cyclone
‘Veronica’ hit Australia, knocking six to eight
million tonnes off BHP Group’s production,
while Rio Tinto is expected to lose about 14
million tonnes of output. The loss of these
exports came at a time when the market
was having to reassess the longer-term
impact of Vale’s safety issues. The tailings
dam breach is expected to have a major
impact on the use of tailings dams in Brazil,
with tighter restrictions on wet
beneficiation and prolonged licensing
processes as a result. Weather-related
disruptions may cause a short price spike,
but Vale’s safety issues appear to be almost
structural. This means the supply gap will
have to be met by other producers. India’s
exports almost doubled in March, but only
to 1.3 million tonnes. This provides a huge
opportunity to players who can step in and
ramp up quickly.
In addition, world steel production is
forecast to continue increasing by 1.8%
annually from 1,689 million tonnes in 2017
to 1,780 million tonnes in 2020, led by
growth in India and other emerging
markets. Production in China – which
represents half of world production – is
expected to taper in 2020, driven by an
expected slowdown in economic growth,
which will offset higher infrastructure
investment. This growth in steel production
in India represents an opportunity for
Vedanta to grow its domestic iron ore sales.
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Market review
Continued
Market drivers and opportunities
The construction sector has been
identified as a pan-India steel demand
driver, on the back of strong infrastructure
development and housing demand; in
particular, for affordable housing. Projects
such as industrial corridors (connecting
existing industrial cities and developing
manufacturing sectors) and Sagarmala
(connecting states through waterways) will
increase India’s connectivity, reducing the
costs of transportation across Indian states.
The Smart Cities initiatives will further
boost urban infrastructure investment.
There are currently 99 smart cities planned
across India.
In addition, the outlook for India’s
manufacturing sector, which has been
lagging behind the service sector as a
growth driver, should improve. Firstly, the
Make in India initiative, which aims to
transform India into a global design and
manufacturing hub, will support the
further development of steel. Secondly,
many states are expected to develop
automotive and ancillary industries, to be a
global auto hub for small cars with a focus
on exports. Finally, some states are also
expected to strengthen their mechanical
machinery sectors.
All these factors point to a high potential for
steel demand growth in India. The speed
with which this potential can be realised
will depend on whether India can
successfully implement both its reform
agenda and infrastructure plans.
STEEL
Construction sector boosting steel
demand
Global crude steel production reached
1,808.6 million tonnes for the year 2018, up
by 4.6% compared to 2017. India’s crude
steel production was 106.5 million tonnes,
up by 4.9% in 2017, meaning that India has
replaced Japan as the world’s second
largest steel producing country. While the
steel demand recovery seen in 2017
continued in 2018, risks have increased.
Rising trade tensions and volatile currency
movements are increasing uncertainty. As
a result, steel prices are expected to
experience volatility in 2019. But India’s
steel demand is expected to move back to
a higher growth track, supported by
improving investment and infrastructure
programmes.
India’s steel use per capita for finished steel
products stood at 66.2kg, way below the
world average of 212.3kg, suggesting a
huge unrealised potential for steel demand
growth. Recently, India has been trying to
unleash this through an extensive reform
agenda and an ongoing push for
infrastructure development. These factors,
along with favourable demographics, are
improving the macroeconomic
fundamentals.
India was a net exporter of steel in the last
two financial years. However, the country
witnessed a change in the current financial
year with imports exceeding exports
during the period April to December 2018.
Products and consumers
Vedanta Limited completed the acquisition
of Electrosteel Steels Limited (ESL), an
integrated steel plant, on 4 June 2018. ESL
saw production increase by approximately
17% in FY2019 compared to FY2018. Wire
rod, TMT and DI pipe products were sold in
India, mainly to the construction,
infrastructure and automotive sectors.
COPPER
Consumption in India and China
fuelling demand
Refined copper consumption grew by 2.9%
in 2018 while demand in China, the largest
consumer of copper increased by 4.9%.
However, the tariff dispute between China
and the US, and the falling GDP in China,
led to increased market uncertainty and
falling copper prices during the year.
On the supply side, India faced a crunch in
the availability of refined copper due to
Vedanta’s Tuticorin smelter closure.
Chinese smelter output increased by 4.2%
in 2018, despite the closure of some
smelters for maintenance during Q4. In
Chile, new environmental regulations led to
smelters closing for maintenance, resulting
in a further supply crunch.
Products and consumers
Refined copper is predominantly used in
manufacturing cables, transformers and
motors as well as castings and alloy-based
products.
The Tuticorin smelter closure affected our
production in India. In FY2019, we
produced approximately 90kt of cathode.
Market drivers and opportunities
In the coming year, copper consumption in
India and China is expected to increase by
11.8% and 1.6% respectively. This rise is
driven by population growth, urbanisation,
the rise of the middle class and the
evolution of electric vehicles (EVs) and is
supported by government measures and
initiatives. Another major driver of
Chinese demand is the ban on Category
7 scrap imports.
On the supply side, there could be further
disruptions in copper production due to
the smelter upgrades in Chile following the
introduction of new environmental
regulations.
Our ability to take advantage of these
opportunities is largely dependent on the
re-opening of our smelter at Tuticorin.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Vedanta, as one of
the country’s largest
natural resources
companies, is
uniquely positioned
to leverage India’s
growth potential
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT MANAGEMENT REVIEW
Sustainability & CSR
Growing responsibly
We Are...
Growing together
with everyone
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INTEGRATED REPORT
STATUTORY REPORTS
FINANCIAL STATEMENTS
KEY STATISTICS:
3.1 million
Community beneficiaries of Vedanta’s
social activities
(2018: 3.36 million)
58.6 million mt
Carbon footprint
(2018: 52 million mt)
28%
Water recycling rate
(2018: 30%)
2.3 million m3
of water saved
(target: 1.5 million m3)
1.4 million GJ
of energy conserved
(Target: 2 million GJ)
`309 crore
Community investment
(2017: `244 crore)
We believe that with our thrust and focus on
sustainability, we can advance both our
business outcomes and those of the people,
host communities and the environments
surrounding us.
Note: Due to its recent acquisition, numbers from Electrosteel Steels
Limited (ESL) have not been included in the HSE & Sustainability
numbers for FY2018-19. They will be included from next year’s
reporting cycle.
Over the years, Vedanta has grown to become one of the
largest diversified natural resources companies in the world.
Our Group has interests in zinc-lead-silver, oil & gas,
aluminium, power, iron ore, steel and copper. All are mature,
high-performing businesses in their own right with
well-developed governance, HSE and community relations
management systems.
Throughout our growth journey, we have remained focused
on safety and sustainability, alongside our commercial goals
of increasing volumes, becoming the lowest-cost producer,
and improving margins. As a Group, we have sought to
embed a standardised, high-performance sustainability
culture across all our businesses while giving each the
autonomy to make day-to-day decisions. Against this
backdrop, we introduced the Vedanta Sustainability
Framework (VSF) in 2011. Its goal has always been to ensure
that each business integrates our sustainability principles
into their operational and decision-making structures.
Main picture: Green cover at Cairn operations
Inset: Project Samadhan at HZL : Promoting integrated farming
systems and livestock development
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Sustainability & CSR
Growing responsibly
To enhance our governance on
sustainability, the Company has recently
constituted a Board-level committee for
sustainability, which sits alongside the
existing CSR committee. The Charter for
the committee requires it to ensure that the
Group performance is in alignment with
the polices, standards, and guidelines
drafted in the Vedanta Sustainability
Framework. It is also expected to advise the
Board on emerging sustainability trends so
that the Company can strategically address
the issues in its long-term planning.
Our central oversight bodies, including the
Board and Group executive committees,
set performance expectations that include
sustainability metrics, and ensure that we
comply with global environmental social
governance (ESG) considerations. Based
on this guidance, the individual businesses
set their own strategy, technology
deliverables, production outcomes,
sustainability measures and other goals.
We are driven to achieve world-class ESG
performance and this ensures that
sustainability issues are central to Group-
level decision-making.
During the year, we have continued to
make progress against our priorities and
achieve positive results in some areas,
while reviewing how we operate in others
and taking steps to improve outcomes for
our stakeholders.
(including community engagement &
development initiatives, and human
rights); and
• people management for talent retention,
diversity of our workforce and providing
equal opportunities to all.
Our sustainability roadmap sets out our
targets and tracks performance on the key
material issues.
We will be updating our materiality matrix
at the beginning of FY2020.
RESPONDING TO MATERIAL
CONCERNS
Our continuous engagement with internal
and external stakeholders enables us to
keep a finger on the pulse of the
expectations they have. Their views serve
as valuable input to our management
group and help it to define the material
issues for the Company.
While we continue our efforts to improve
our systems and their performance in all
the key issues identified, based on the
external and internal stakeholder feedback,
the following areas have emerged as being
the most material in the last year
demanding either management or
stakeholder attention:
• the safety of our workforce;
• environmental management;
• retaining our social licence to operate
Below: Our employee from Cairn Oil & Gas interacting with the local community
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Objectives and targets FY2019
Status Performance
Target FY2020
The safety of our workforce
Achieve score >75% in six safety performance
standards
Average score achieved was 61%
Zero fatal accidents and an LTIFR of 0.30
Nine fatalities; 0.46 LTIFR
Environment management
Achieve water saving of 1.5 million m3
2.3 million m3
Achieve fly ash utilisation of 75%
111% 1
Continue our reduction in GHG intensity and formalise
our target
14.6% reduction; on-track to achieve the target
Achieve 2 million GJ in energy savings
1.4 million GJ
Develop our capability and strengthen tailing
management practices across the Group
Audits completed; recommendations under
consideration
Retaining our social license to operate
Complete the baseline and social impact assessments
in all businesses
Completed
Achieve score >75% in 10
safety performance standards
Zero fatal accidents and an
LTIFR of 0.30
Achieve water savings of 2.5
million m3
Achieve fly ash utilisation of
80%
Reduce our GHG emissions
intensity by 16% from a 2012
baseline by 2020
Achieve energy savings of 1.75
million GJ
Third-party review of tailings/
ash dyke management
system and development of
site specific improvement
plan (India operations)
Ensure alignment of all BU
plans with issues identified
during baseline surveys
250 Nand Ghars to be constructed in FY2019, and
planning for additional 1,000 to be completed
358 Nand Ghars constructed. Planning for
additional 1,287 completed.
1,200 Nand Ghars to be
constructed in FY2020
Develop a standard policy on employee engagement
for the Group
Under progress
People and diversity
Continue to focus on Code of Conduct training for all
professional employees, including new hires
100% of new employees trained; existing
employees are given online training annually
Achieve 33% female representation at Vedanta Board
level by 2020
Work in progress. 20% of the Vedanta Board is
female.
Focus on anchoring and engagement of high- potential
employees through our flagship programme
V-Connect
Under progress
Initiative is directly anchored by the business
leadership team through their respective HR
teams. It ensures that our professional population
is anchored by senior leaders across the BUs.
Roll out of employee
engagement platform across
the Group
A standard on-line community
grievance record/redressal
software (NIVARAN) across
the Group
Continue to focus on COC
training for all professional
employees including new
hires
Achieve 33% female
representation at Vedanta
Board level by 2020
Diversity % improvement in
our campus hiring
programme by 5%
Focus on Right Management-in-Place in each SBU
There are 41 SBUs in place, each led by a SBU
president. SBU Management-in-place is regularly
reviewed by the Group Chairman and Group ExCo
Ensuring the right ExCo &
succession for each business
1
The number exceeds 100% as we were able to utilise our legacy fly-ash waste for internal infrastructural development projects.
Achieved
In progress/Partially achieved
Not achieved
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Sustainability & CSR
Continued
A STRUCTURED APPROACH TO
SUSTAINABILITY
The Vedanta Sustainability Framework is
central to our sustainability agenda, and is
focused 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 the desired outcome of this
approach.
Focus areas: Code of Conduct, ethics,
health, safety & environment
2. Building strong relationships
We maintain an open and continuous
dialogue with our stakeholders. Our goal
is to ensure that we align our business
planning, community relations and CSR
programmes with stakeholders’ needs,
maintaining and strengthening our social
licence to operate.
Focus areas: stakeholder engagement
and management; human rights,
neighbourhood dialogue
3. Adding and sharing value
We drive economic empowerment and
generate 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 to create a positive
environment for successful operations.
LTIFR
9
8
0
.
2
5
0
.
9
4
0
.
1
4
0
.
3
4
0
.
6
4
0
.
.
4
0
5
3
0
.
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
FATALITIES
6
1
9
9
7
5
5
FY14
FY15
FY16
FY17
FY18
FY19
RESPONSIBLE STEWARDSHIP
It is critically important to us that we take
care of the health and safety of our
workforce. We also seek to tread as lightly
as we can to minimise the environmental
impacts on those who live around us, and
to protect natural resources.
The safety of our workforce
Despite our continued efforts to improve
the safety systems across the Group, this
year saw the tragic loss of nine of our
colleagues in work-related accidents.
Alongside identifying root causes, plugging
existing gaps, training the workforce and
management in identifying safety hazards
and making better risk decisions, our
leadership team has put its own roles and
responsibility under a microscope. A key
area of focus has been the practice of
Visible Felt Leadership on safety, which
requires all leaders to spend more time on
the shop floor, identifying and correcting
unsafe acts. In addition, the team will shift
its attention to monitoring leading
indicators, such as time-spent-on-field,
safety interactions, checking and
managing critical safety risks, and
proactively engaging with long-term
business partners on their safety
performance.
Below: Safety is paramount at each step
We are driven to
achieve world-class
ESG performance and
this ensures that
sustainability issues are
central to Group-level
decision making.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Chetna – a programme to raise safety
consciousness
We are determined that if any safety
incident occurs, we learn from it and use its
lessons to prevent any repetition.
An analysis of past incidents revealed that
many could have been avoided if workers
had been more aware of their surroundings
and practised safe behaviours. BALCO
launched ‘Project Chetna’ (Project
Awareness) to coach, assist and train the
workforce in recognising warning signals,
remaining focused on their task, and
applying known, safe behaviours that can
help prevent accidents.
The programme has trained over 1,600
employees and 1,100 contract workers, and
made safe actions and safe behaviours
clearer. As a result of this focus, the LTI
frequency rates have nearly halved from
the previous year.
Daily ‘visual management’ making
issues visible
At the Lanjigarh refinery, the team has
adopted a concept from the automotive
industry. They now have a visual
management system, with the idea of
making key business processes literally
visible.
This approach helps management teams
to identify any bottlenecks that need to be
resolved and eliminated in order to run a
successful refinery. A key part of this
approach is to resolve problems and
barriers in a structured manner.
All sections in the plant area are assigned
boards that detail:
• the safety measures required;
• focus areas for safety interactions;
• places where housekeeping inspections
will occur; and
• the high-risk tasks for the day and their
corresponding control measures.
The boards also cover all the actions being
undertaken during the day, with a specific
focus on identifying any unplanned
activities and/or risks in the operational
area that may impact the refinery. They also
flag any maintenance activities that may
need to be performed over the next 24
hours.
The final assessment involves identifying
risks that the section may generate due to
its activities at the ‘one-week-out’ stage,
enabling advance planning to mitigate
them.
This has allowed the plant managers to
systematically identify and address risks to
the plant and eliminate safety hazards.
This approach underlines the overall
philosophy of the Group when it comes to
running safe operations. While our safety
performance standards outline the
expectations and help set out guidelines to
prepare standard operating procedures, it
is practices such as these above that are
helping businesses implement safe
working conditions.
Additional practices such as Visible Felt
Leadership, improving the management of
safety critical tasks as well as increasing the
awareness, training, and accountability of
our business partners will help the Group
to deliver on its commitment of ‘zero harm’.
Statistics for health and safety
• 1.5 million man-hours of HSE training
delivered
• 94 LTIs and nine fatalities in FY2019
Managing our environmental
performance
Vedanta is committed to minimising the
Group’s environmental footprint. To do this
we have embedded efficiency goals across
the organisation focused on lowering our
airborne emissions, reducing our waste
and effluent volumes, and optimising the
use of energy and water. We have also
taken measures to protect the biodiversity
of our operational regions.
The Vedanta Sustainability Framework
(VSF) comprises comprehensive policies
and standards on water, energy and
carbon, waste and biodiversity. The
framework, combined with objectives and
targets on energy, GHG, and waste & water
management, ensures that each of our
businesses follows the same high
standards of environmental management.
Tailings dam management
Tailings dams and ash ponds are inherent
in mining operations. However, as the
recent Vale disaster in Brazil has
demonstrated, if breached they can pose a
significant threat to neighbouring
communities as well as damage the
environment.
At Vedanta, our principal concern is the
safety of the people who live downstream
from our dams. Over the last 18 months,
the Company has taken active measures to
improve the management of our dams and
ponds. These started with an independent
assessment, and over the last year we have
brought on board the global experts
Golder Associates to review the integrity of
our dam structures and their associated
management practices. The review has
been completed at all our dam locations
and we are now reviewing the
recommendations for implementation.
The Company has also introduced a
Tailings Dam Management Standard to
ensure that all our Group companies follow
consistent international best practices.
Findings from the review were also
supplemented by measures to prepare the
dams for the monsoon season, which
could experience overflow conditions in
the event of heavy rainfall.
Other steps we have taken to improve
oversight include daily/weekly checks (as
required); revising the risk matrix;
introducing online surveillance systems;
conducting liquefaction analysis;
enhanced training for all key personnel;
improved documentation; quarterly
dam-state reviews by senior management;
and developing a closure plan for all
facilities.
Although there is still much to do, we
believe we have initiated a structured
management approach that will minimise
the risk of a future dam breach.
Water management
Managing water effectively is critical, both
for our operations and for the communities
who live near us. By understanding how we
source and use this resource, our
businesses can de-risk their operations
from unplanned stoppages caused by
supplies drying up.
Last year, we performed a water risk
assessment at 25 of our most significant
business locations. This determined the
risk based on water-stress information
available in global and public databases
and from site-specific measurements. The
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Sustainability & CSR
Continued
As a responsible
corporate citizen,
besides the many
environmental
initiatives, we
continue to
positively impact the
local communities in
the areas where we
operate. Women
and children remain
our focus and our
efforts benefitted
3.1 million people
across 1,169 villages
in FY2019.
approach evaluated physical, social/
regulatory, economic and business risks
related to water. In addition to
understanding each location’s risk, our goal
is to standardise this risk assessment
across our Group companies.
Our findings confirmed how our operations
in the high water-stress regions of India
(Rajasthan, Punjab, 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. Each of
our businesses has started to put in place
appropriate mitigation measures to counter
these risks.
Total water consumption (million m3)
243.44
241.66
241.56
Water recycled/reused (million m3)
Water recycled (%)
66.99
27.52
71.70
29.67
64.65
26.76
FY2019
FY2018
FY2017
Energy and carbon management
Our energy and 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 new technologies and processes to enhance our energy
efficiency.
Energy consumption (million GJ)
FY2019
FY2018
FY2017
Direct energy consumption
Indirect energy consumption
Total energy consumption
483.90
424.94
411.95
62.59
14.34
9.07
546.49
439.28
421.02
Climate-related business risk
Climate change continues to pose an even-greater risk to the planet. India, which has set
ambitious targets to reduce its carbon intensity by 33-35% by 2030, and to source 40% of
its electricity from non-fossil sources, continues to push ahead to meet those targets.
Vedanta’s continuing commitment to decrease our climate change impact is delivering
measurable results. Last year we said we expected to reduce our GHG intensity by about
16%, from a 2012 baseline, by 2020. We are on-track to meeting this target. By FY2019 we
had achieved a reduction of 14.6%.
GHG emissions (million tCO2e)
FY2019
FY2018
FY2017
Scope 1 (direct)
Scope 2 (indirect)
Total
55
3.5
58.5
51
1.2
52.2
51.7
1.4
53.1
Improving efficiencies in the aluminium potline at Jharsuguda
The smelting process to produce aluminium is executed in pots. In Smelter 1 there are 600
pots in the pot room. Smelting is a continuous process and cannot be stopped and started
frequently. The rectifier, which provides DC power to the potline for the electrolysis
process, is therefore key to the smelting process.
The rectifier converts AC current to DC. During the project initiation phase the rectifier
conversion ratio was measured at 98.32% efficiency. The target set by the team was to
drive efficiency up to 98.50% as this could result in substantial cost and energy savings.
Through observation, data and experience, the team identified that some initial quick-wins
could be achieved by modifying specific processes, such as cleaning of the heat
exchanger in the rectifier units, optimisation of the de-mineralised water-flow, and the
cooler slot.
Outcome
These operational and process improvements, such as scheduled calibrations, changing
nuts and bolts during overhaul, and dismantling electrolysis plates, led to enhanced
efficiency of 98.5%, and savings of:
Energy saving
Coal consumption reduction
Carbon dioxide reduction
6.9 million units per annum
4800 tonnes
7040 tonnes
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MANAGEMENT REVIEW Air quality
We are committed to identifying and managing our airborne emissions. We monitor
particulate matter (PM) and SOX as part of our ambient air quality process. We also monitor
as applicable lead and fluoride emissions from our operations.
Stack emissions (in MT)
Particulate matter
SOX
2018-19
2017-18
2016-17
8,862
8,414
9,296
242,234
189,823
174,340
Waste
To comply with our ‘Resource Use and Waste Management’ technical standard, we first
reduce our waste, in quantity as well as quality (reducing the toxicity), and then recover and
recycle where possible (either in-house or through authorised recyclers). The final stage is
disposal in landfill or by incineration, using authorised, licensed and secured landfills.
Non-hazardous, High-Volume and Low-Effect wastes such fly ash, red mud and phospho-
gypsum are the predominant wastes generated from our operations. Hazardous waste
includes used/spent oil, waste refractories, aluminium dross, spent pot lining and residual
sludge from smelters.
High-Volume-Low-Effect Waste recycling
■ Fly-Ash ■ Slag ■ Jarosite ■ Red-mud
Generated
Recycled
9
1
.
1
1
9
3
.
2
1
5
3
0
.
2
5
0
.
5
7
.
1
8
7
0
0
.
6
0
0
.
9
4
0
.
HINDUSTAN ZINC: COMMITTED TO ACHIEVE ZERO WASTE
Responsible waste management is a fundamental priority across all Vedanta businesses.
At Hindustan Zinc this requires particular management focus since the refined metal
represents only around 8% of the lead-zinc mineral ore.
The business applies the ‘4R’ waste strategy – reduce, re-use, recycle, & reclaim – and
disposes of any residual waste through most eco-friendly avenues available.
Reduce – Fumer: preventing waste at source
In recent years Hindustan Zinc has been converting Jarosite, a major waste from zinc
smelters, into a non-hazardous material by using state-of-the-art 'Jarofix' technology. We
are now about to go a step further by adopting ‘Fumer’ technology, stopping the
generation of jarosite at the source itself, and recovering metals from waste while
generating slag to be used by cement industry.
The first zinc Fumer project, scheduled for FY2020 at Chanderiya, will have a waste
treatment capacity of 160,000 MT per annum. The project will advance our goal of zero
solid waste and will reduce our land requirement for Jarofix storage by one hectare
annually. Fumer plants are also planned at other smelters in Chanderiya and Dariba.
Re-use – Turning tailings into fillings
Tailings are the materials left over from
separating the valuable fractions of ore
from uneconomic waste. They are usually
managed through surface disposal in lined
pits, but these require huge land areas.
However, instead of disposing of tailings, we
have started a unique trend in mining in India
with the successful commissioning of
‘paste-fill’ plants at our Sindesar Khurd and
Rampura Agucha mines. Mining operations
require filling of stopes/voids to ensure
stability and to control subsidence.
Traditionally this has been executed by using
hydraulic filling with cement, but a new
concept is to use paste-fill technology in
which the tailings are modified into a
semi-solid paste which is then used to fill the
empty underground voids. The paste filling
process is fast and uses almost all the tailings,
minimising the need for surface disposal.
With the successful commissioning of
paste-fill plants at Sindesar Khurd and
Rampura Agucha, along with the existing
facility at Rajpura Dariba Mine, we will reuse
more than 60% of our tailings and avoid
surface disposal. This will increase the life of
the tailing dams and save hectares of
additional land required for expansion of
these dams.
Innovating to use smelter waste in
cement and highway construction
For several years, we have also partnered
with reputable R&D organisations and
corporates to use slag in cement and
highway construction. This has received
approval by the Bureau of Indian Standards
and the Indian Road Congress. In FY2019,
over 300,000mt of slag was used in
cement manufacturing and road
construction. This freed up several
hectares of land for alternative uses,
replaced virgin red ochre and limestone
and reduced CO2 emissions.
Below: Geotextile laid on dump slopes for dump
stabilisation at Codli mine
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Continued
Similarly, based on studies conducted by
various government organisations, Jarosite
and Jarofix have been determined to be
commercially viable for usage in cement
industry and road construction. In FY2019,
over 13,000mt of Jarosite was used in the
cement industry while over 70,000mt of
Jarosite and Jarofix were used in road
construction projects.
Recycle – Waste to wealth
Our ancillary product plant at the Dariba
Smelting Complex is an important ‘waste
to wealth’ initiative that generates value
from certain recycling activities. The plant
treats smelting residues to produce key
consumables such as copper sulphate,
zinc sulphate and potassium antimony
tartarate, which will be recycled back into
beneficiation and smelting processes.
Following its success, a new ancillary unit,
expected in H1 FY2020, is under
construction at the Chanderiya lead zinc
smelter to treat all smelting process
residue, including work-in-progress
material such copper dross, purification
cake, antimony dust and cadmium sponge.
Reclaim – Wastelands hosting solar
farms
Wherever we need to occupy land for
mining and smelting waste, we are
ensuring it is put to maximum use. We have
used the Jarosite pond at the Debari
smelter, the old tailing dam at the Dariba
mine and the waste dump at Rampura
Agucha to double up as solar farms. We
have installed 38MW of solar generation
there that would otherwise require an
additional footprint of 190 acres.
In addition:
• We have rehabilitated an old tailing dam
after stabilising the tailings and then
planted more than 150,000 trees over a
38 hectare area. This first of its kind
project was undertaken jointly by HZL,
Dept. of Bio Technology (GoI), NEERI and
the Nagpur & Swedish International
Development Agency.
• We also have initiated 'Zinc Football’- a
unique programme in India. At the heart
of this initiative is the Zinc Football
Academy at Zawar, a residential
world-class football coaching facility.
This facility was converted from old
tailing dams, and today gives hand-
picked kids, chosen from 4,000 aspiring
footballers from all over Rajasthan,
opportunities and guidance to be
developed into professional footballers
alongside their academic education.
STATISTICS FOR ENVIRONMENT
Successes:
• We recycled 94% of High-Volume and
Low-Effect waste in sustainable
applications.
• We saved 2.3 million m3 of water against
targeted savings of 1.5 million m3.
Work in progress:
• We conserved 1.4 million GJ of energy
against targeted savings of 2 million GJ.
• Our GHG intensity reduction target, from
a 2012 baseline is 14.6% against an
expectation of 16%, by 2020.
Below: Captive Power Plant at Chanderiya Smelting Complex
BUILDING STRONG RELATIONSHIPS
Human Rights
We regard upholding human rights as a
fundamental responsibility, and this is
brought into particularly sharp focus given
that most of our operations are performed
in developing countries. It is a material
consideration across all our business
decisions.
Our Human Rights Policy is aligned with the
UN’s Guiding Principles on Business and
Human Rights, and includes strict
prohibition of child or forced labour – either
directly, or through contract labour.
These are non-negotiable offences at
Vedanta and we have mandatory systems
in place to enforce this policy at all our
operations. Further, we carry out periodic
inspections of our remote mine locations
and require proof of age for all contract
workers.
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. The collective bargaining
agreements are based on transparent and
fair discussions between the management
and union representatives. Vedanta’s
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 practise this Code.
We also operate a Supplier & Contractor
Sustainability Management Policy. Both the
Code and the Policy clearly communicate
our expectations of suppliers: to comply
with all relevant legislation and follow our
policies while executing work for Vedanta,
or on our behalf.
Adding and sharing value
Our operations are mainly located in the
emerging economies of India, South Africa,
Namibia and Zambia. We believe that we
have an important role to play in
developing societies and communities
where we operate, enabling them to share
in the value we collectively create.
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MANAGEMENT REVIEW 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 through generating
economic value, distributing wealth,
investing in employees and enhancing
standards of living are all key elements of
the Vedanta 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.
Communities
Vedanta works towards a larger goal of
creating enduring value for the
communities from where it operates.
Proactive engagement with communities
helps to resolve concerns they may have
about our operations. It also allows us to
understand their expectations of the
Company, and so help 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. In some
instances, like at Tuticorin, local
stakeholders have sought to withdraw their
social licence to operate, resulting in a
stoppage of our operations. When we
encounter such situations, our teams have
taken a step back and sought to
understand the root cause of the
discontent. Steps have been taken to
modify our response and engagement
with the communities – with increased
stakeholder interactions, review of our
policies and procedures, and where
required, steps to respond to stakeholder
concerns.
The majority of our initiatives are identified,
developed and carried out in collaboration
with local government bodies and
community organisations. They are also in
alignment with the needs of the
communities, and the Company has
committed to align its CSR activities to the
priorities of its neighbourhood
communities & also national/international
priorities including the Sustainable
Development Goals. Almost all our
programmes follow a bottom-up
community engagement approach. This
collaborative approach ensures
community ownership, suitable project
design, effective delivery and post-project
sustainability. Apart from communities,
Above: Nand Ghar: Supporting early
childhood education
we also strongly believe in partnering with
government agencies, corporates, civil
society organisations & community-based
organisations to carry out durable and
meaningful interventions. This ‘4Ps’
model (public-private-people-partnership)
has inspired us to participate in ambitious
long-term projects such as the Nand
Ghar initiative.
All our CSR programmes are governed by
the Vedanta CSR Policy, and Corporate
Technical Standards that are part of the
Vedanta Sustainability Framework. 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 is led
by a senior business leader and comprising
CSR Heads & 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.
Vedanta has a strong Board CSR
Committee, which includes senior
Independent Directors. The Committee
provides strategic direction for CSR
activities, and approves its plans and
budgets. It also reviews progress and
guides the CSR Teams towards running
well-governed and impactful community
programmes.
In FY2019, Vedanta spent `309 crores on
social investments and CSR activities. This
is 26% more than the previous year’s `244
crores. This money is spent across 1,169
villages, benefiting nearly 3.1 million
people.
Project updates
1. Nand Ghar and Children’s Well-being
Projects
The importance of education for social
growth and upliftment is undisputable
and for Vedanta this is a very important
pillar of its work with communities. Our
various education and childcare
initiatives have reached over 145,000
children.
500 Nand Ghars: Preparing India’s
future
Vedanta’s Nand Ghar ‘anganwadis’ have
been designed to support the Indian
Government’s Integrated Child
Development Services (ICDS), a flagship
programme for child and maternal
health.
These rural child-health centres provide
a community social hub and access to
services that every young child needs.
They provide early years education,
nutritious food, safe play areas and
television for interactive learning, and are
equipped with rooftop solar panels for
24x7 electricity, water purifiers and clean
lavatories.
Healthcare services are also delivered by
a visiting mobile health van, and
importantly the centres also give local
women access to a range of
opportunities to learn new skills.
During FY2019, Vedanta opened its 500th
centre, at Chaksu Block in Jaipur, and to
date there are 502 operational Nand
Ghars across Rajasthan, Uttar Pradesh
and Madhya Pradesh, transforming the
anganwadi landscape of India. The
initiative is delivering impact at scale,
with more than 17,000 children receiving
pre-school learning with advanced
teaching methods, and over 11,000
enjoying nutritious meals every day.
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Continued
While this 500th is a major milestone, we
have greater ambitions: Vedanta is
working to open 4,000 Nand Ghars
across India. The project ultimately aims
to impact 85 million children and 20
million women across 1.37 million
anganwadis in the country.
Our Founder and Chairman Anil Agarwal
said: “We strongly believe that a nation
can only progress by investing in the
future of women and children. This
initiative addresses issues relating to
pre-primary education, healthcare,
nutrition for children, and economic
empowerment for women in rural India”.
As part of the Khushi initiative, HZL, in
partnership with Government of
Rajasthan strengthens the functioning of
3,089 ICDS centres (called Anganwadis)
in the five districts of Hindustan Zinc’s
presence, reaching over 60,000 children
and caters to the health, nutrition and
pre-school needs of children in the
formative 0-6-year age group. The
project also conducts periodic
assessments to track developmental
metrics of the children. This year an
average increase of 11% in children’s
learning capability was identified
through these standardised
assessments. Attendance also saw an
increase with the average attendance
increasing from 44% two years ago to
60% now.
Vedanta Limited Jharsuguda initiated a
project called ‘Vedanta Vidyarthi Vikas
Yojana (VVVY)’ in the year 2009 to
strengthen the education standards of
secondary school students through
remedial coaching classes. Since the
beginning of the project, quality
education has been provided to the
students of standards 8 to 10. Significant
work has been undertaken to improve
the quality of education provided and
this has improved the pass-percentage
of children in their school exams. To
date, 3,975 students have been enrolled
under VVVY project. 1,346 students
appeared in matriculation examinations
and 1,130 students have successfully
passed with good marks.
2. Women’s empowerment
Women’s empowerment is all about
equipping and enabling women to make
life-determining decisions. Vedanta
recognises the need to empower
women and is running several projects to
help communities take a step towards a
more equitable future. The programmes
Above: Developing communities through women empowerment
are associated with around 35,000
women (up from 28,000 last year) and
amongst them 3,600 women have
started/revamped their own micro
enterprises. One of our interventions in
this area is the Subhalaxmi Cooperative
Society in Jharsuguda, which has
emerged as a model community-based
organisation. The cooperative has
successfully completed 10 years of
empowering women since its inception
and is currently touching the lives of
3,793 members in 71 villages. The
cooperative, aided by this programme,
has been able to generate funds of `2.52
crore and there has been a significant
increase in the income of its members.
HZL is running a similar programme
called Sakhi which started three years
ago and now has 1,922 Self Help Groups
(SHGs) connecting the Company with
23,954 women. The total savings
accumulated through this project are
now at `6.22 crores and the total loans
disbursed amounts to `17.13 crores. This
money is used by members for
household consumption, agriculture and
health & sanitation. 492 women have
used the loans to create new enterprises
or expand existing enterprises.
3. Health Care
There is a great disparity in the quality
and coverage of medical treatment in
India. The majority of the rural population
lack basic primary healthcare and given
that most of our operations are also in
rural areas enabling rural communities to
have access to affordable and quality
healthcare is an important focus for us.
The Vedanta Hospital at Lanjigarh
continues to provide much needed
healthcare to thousands in the District of
Kalahandi, Odisha. This year, the hospital
has seen a total footfall of 67,425
patients, of which nearly a third were
new patients – a testament to the
effectiveness of the services provided. A
further 12,998 patients were treated
through the Lanjigarh team’s Mobile
Health Van programme.
VMRF
BALCO has established the Vedanta
Medical Research Foundation (VMRF), a
voluntary, non-profit organisation to
prevent, control and eradicate cancer
and illnesses related to it. Balco Medical
Centre, a state-of-the-art oncology
facility in Naya Raipur, is its first flagship
initiative. As the first super-specialty
hospital with the capability to treat
cancer, Balco Medical Centre’s genuinely
colossal impact is validated by the
reception it received from the people
and the milestones achieved – over
4,000 patients were served, more than
230 patients underwent radiation, 250
plus surgeries were performed and over
1,000 chemotherapies were carried out.
4. Agriculture and Animal Husbandry
In much of rural India, the communities
continue to rely heavily on agriculture and
animal husbandry. We therefore follow a
livelihood development approach of
integrating agriculture, dairy, water
management, technology, farmer’s
organisations and market outreach. To
increase the income of farming
community in Barmer through
productivity enhancement of agriculture
and livestock, project Unnati, a Cairn CSR
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MANAGEMENT REVIEW
microfinance. Currently, 160 students are
being trained and the plans are to train
700 youths each year. Through other
initiatives like the Mining Academy, ITI
training at Maruti and Business Process
Outsourcing (BPO) training, the
Company has been able to train 559
youths this year.
6. Environment protection &
restoration
In our operations, we make it a priority to
operate in harmony with the natural
environment. The Company is
committed to safeguarding the
environment and makes extensive
efforts to protect and restore nature.
Pasumai Thoothukudi, an initiative by
Sterlite, launched on World Forest Day
with a vision of developing a green belt
in Thoothukudi is an illustration of the
significance of this commitment for the
Company. The Company aims to plant
one million trees by the culmination of
the programme.
7. Sports & Culture
Sport, at an individual level, helps build
character, benefits health and for
talented individuals becomes a source of
livelihood. However, it is at a community
level where sports can have a value-
altering effect which can lead to a more
tolerant and inclusive society. Vedanta
identifies this dual impact that can be
achieved through sports and thus its
sports initiatives are focused on two
main objectives: Sports for all and Sports
for excellence. Vedanta, through its
football initiatives in Rajasthan by HZL
(Zinc Football Initiative (ZF)), and in Goa
by the Iron Ore Business (Sesa Football
Academy (SFA)), established on a
reclaimed mine, has taken great strides
in getting closer to reaching these
objectives. Zinc Football trains around
2,000 young people, both girls and boys
in its 64 Zinc Football Schools. Sesa Goa
also has four similar centres training 500
children on a weekly basis. These
centres enable the game to reach the
masses and help create a culture of
sports in the country. Both academies
have their centres of excellence with
state-of-the-art infrastructure that have
not just developed players for their
respective state teams but also
contributed to the national setup with
seven alumni of SFA playing for the
Indian national team and eight playing in
the elite Indian Super League. The
second edition of ‘Vedanta Women’s
Football League’ saw the involvement of
160 female football professionals and
provided a platform for them to
showcase their talents.
8. Community Infrastructure
Infrastructure development provides
impetus for economic growth and it is no
different for the villages in our operational
areas. It not only helps elevate the quality
of life in the villages, but also forms the
foundation for socio-economical
upliftment. The Company recognises this
need and therefore is aiding the
operational villages in developing basic
infrastructure, such as school toilets,
drinking water projects, sports facilities,
local drains and community centres as
per local needs.
initiative, was set up. More than 10,000
farmers have benefited through various
interventions like horticulture
demonstrations, construction and
renovation of traditional water harvesting
structures like KHADIN. Project
SAMADHAN by HZL aims to improve the
returns from Agriculture & Livestock for
about 30,000 families. By the end of this
year, the project had successfully worked
with 8,660 farmers on agriculture-related
activities and 8,944 farmers on livestock-
related activities.
In Jharsuguda, to secure economic
prosperity among identified households
of Siripali village, project Jeevika
Samriddhi was launched. The project
aims to augment irrigation infrastructure,
promotion of advanced agriculture,
application of bio-fertiliser and
pesticides and making farming a
profitable profession. 111 farmers are
benefiting from this and because of this
project, the irrigation potential of the
village has increased by 21.34%.
5. Skilling the youth
To maximise the output from the
immense demographic dividend India
has, it is imperative that the youth are
trained in skills suited for the current
economic scenario. With the aim of
channelling this untapped potential the
Company is running a lot of skill
development initiatives providing
training to more than 3,000 youths.
Balco in partnership with IL&FS is
providing training to young people in five
different potentially high employment
positions – Hospitality, Welding assistant,
Industrial stitching, Fitter fabrication and
Electrician. The institute has provided
assured employment opportunities to
7,800 students since the inception of its
operations. In Thoothukudi, Sterlite
Copper through its Tamira Muthukkal
project has provided vocational training
to 2,000 youth and currently covers 500
more beneficiaries helping them gain
skills thus increasing their employability.
A few other programmes run by HZL,
also aim to improve the skills of the youth
of Rajasthan and increase their
employability. HZL’s Skilling and
Entrepreneurship Centres provide
training to young people to become
Domestic electricians, Security guards,
General duty assistants, Sales entry and
Data entry operators and to work in
Above: Zinc Football Academy: Building character and fueling excellence
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
87
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Sustainability & CSR
Continued
Statistics for community projects
• In FY2019, we invested `309 crores in
social investment programmes.
• 1,169 villages are benefiting from our
CSR programmes.
• There are 3.1 million beneficiaries of our
community development programmes.
• Excellence
Our primary focus is on delivering
performance of the highest standard. We
are constantly looking at ways to reduce
costs and increase production in our
businesses through benchmarking best
practices and employee participation.
Right management in place (RMIP)
To re-emphasise the Group’s philosophy of
empowering the SBUs, we have reviewed
our existing Business and SBU structures,
and followed a rigorous assessment
process to ensure we have right talent in
the right positions. The RMIP process also
ensures that we have filled all the critical
roles within our structures and any gaps in
the management team are supported by
strategic plans to fill vacancies. Our
approach to recruitment is focused on
hiring diverse, high-quality talent. We
operate our businesses with global best
practices and are benchmarked to global
standards. Therefore, where needed, we
also hire expats and specialists with global
experiences to manage such operations.
Vedanta Leadership Development
Programme (VLDP)
VLDP is our flagship programme which
aims to build organisational capability
through developing talented individuals
from premier management and
technology institutes. It is a tailored
programme which focuses on nurturing
these bright young minds to act as
catalysts to steer our business to the next
level of growth by implementing
transformational new age ideas. The
programme includes induction sessions,
cross-functional projects in significant
roles, job rotation, development
opportunities, and the right mentoring to
ensure these individuals get an in-depth
knowledge of our operations and
recognise their areas of interest for a
suitable role.
Diversity
Diversity remains a strong focus for us at
Vedanta. We are committed to providing
equal opportunities to our employees
regardless of their race, nationality, religion,
gender, orientation or age. We are pleased
with our progress to date on gender
diversity, and women now represent 10.5%
of our total workforce and 20% 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
representation among our employees.
We are also focused on increasing the mix
of geographies and nationalities in our
workforce. Since most of our operations
are in remote areas, we place a strong
emphasis on recruiting employees from
the local population.
We are an equal opportunity employer, and
a meritocracy – all our decisions regarding
employees are based on their contribution,
attitude and potential.
RECRUITMENT
Our recruitment programme includes a
wide range of initiatives to support us in
hiring skilled professionals across different
functions and businesses.
Below: Enhancing agricultural incomes through innovative techniques
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
on a personal as well as professional front.
The Vedanta values that drive the
organisational culture are:
• Trust
We actively foster a culture of transparency
in our interactions and encourage an open
dialogue which ensures mutual trust and
respect.
• Care
We are committed to our triple bottom line
of ‘People, Planet and Prosperity’ to create
a sustainable future in a ‘zero-harm, zero
waste and zero discharge’ environment for
our communities.
• Integrity
We engage ethically and transparently with
all our stakeholders, taking accountability
for our actions. We maintain the highest
standards of professionalism and
stringently comply with all international
policies and procedures.
• Innovation
We encourage innovation that leads to zero
harm, zero waste and zero discharge, and
we are committed to optimising the use of
our natural resources, improving
efficiencies and maximising recoveries of
by-products.
• Entrepreneurship
People are at the heart of everything we
do. We create an enabling environment to
support them in pursuing their goals.
• Respect
We place an 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.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW TALENT MANAGEMENT AND
DEVELOPMENT
Internal Growth Workshops
We have always aimed to design an
organisation which is spearheaded by our
'leaders from within’. Recognising internal
talents and promoting them to leadership
roles has been the driving factor in our
journey of rapid growth. Aligned with this
philosophy, the Group conducts
'Chairman’s Internal Growth Workshops’
which enable our young leaders to fulfil
their potential through development
opportunities and provide us with a talent
pipeline enabled to fill critical roles across
the Group. These workshops have resulted
in the development of 600+ high-potential
new leaders across the Group’s businesses
who are given significantly elevated roles
and responsibilities.
Leadership and talent analytics
We have partnered with experts to evaluate
our existing talent management practices
and implement best-in-class new initiatives
for talent development. We are focusing on
employing digital channels to run
accelerated growth drives, workshops,
in-house learning modules and other
development opportunities.
3600 feedback
At Vedanta, we promote growth and
nurturing of our internal talent pool by
encouraging internal dialogue between
senior leaders and their young mentees
and peers. For this reason, we have
launched 3600 feedback for our ExCo
leaders in collaboration with an external
partner. We believe that this will help to
fast-track the assessment and
development of leaders and we aim to
extend this to cover all our professionals in
due course.
Above: Nurturing young talent for future leaders
Employee Stock Option Scheme
(ESOS) 2018
Employee stock options are a significant
component of our long-term incentives.
They enable our employees to share in the
success of the Company, encouraging
high-growth performance and reinforcing
employee pride with a focus on ownership.
The scheme was launched after obtaining
statutory approvals, including shareholders’
approval in 2016. In 2018, 35% of the
workforce participated in this scheme with
a focus on our young and senior leaders,
employees driving strategic projects and
high-impact task force members.
PERFORMANCE MANAGEMENT & TOTAL
REWARDS
V-Perform: One performance system
for one Vedanta
Our focus is to constantly improve the level
of automation in all our operations.
V-Perform is a pan-Vedanta initiative to
standardise the Performance Management
System (PMS) and process across all
Vedanta Group companies by leveraging
technology. This enables functions, teams
and individuals to track performance on a
regular basis, evaluate efficiency through
advanced analytics and implement
proactive decisions towards achieving
Vedanta’s objectives. We foster a culture of
safety and sustainability to achieve our
ultimate vision of ‘Zero Harm, Zero Waste &
Zero Discharge’. To enhance our safety
performance in the workplace and
strengthen our existing Safety
Management System, a safety competency
assessment process was completed
mid-year by all employees.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
89
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Management discussion and analysis
Above: Ravva off shore rig
Vedanta Limited is a diversified natural
resource company with a portfolio of large,
world-class, low-cost, scalable assets,
operating in high growth markets. The
Company is a leading player in the zinc, oil
& gas, iron ore, lead, silver, steel, copper,
aluminium and commercial power sectors.
Zinc sector
The Company’s Zinc business in India is
owned and operated by Hindustan Zinc
Limited (HZL), with the Company holding a
64.9% interest and the Government of
India 29.54%. HZL’s operations include five
zinc-lead mines, one rock phosphate mine,
four hydro metallurgical zinc smelters, two
lead smelters, one pyrometallurgical
zinc-lead smelter, eight sulphuric acid
plants, and six captive power plants in the
state of Rajasthan. It also owns processing
and refining facilities for zinc at Haridwar,
and processing and refining facilities for
zinc and lead, together with a silver refinery
at Pantnagar, both in the state of
Uttarakhand in Northern India. The
Company has wind power plants in the
states of Rajasthan, Gujarat, Karnataka,
Tamil Nadu and Maharashtra.
The Company’s Zinc International business
comprises the Skorpion mine and refinery
in Namibia, operated through THL Zinc
Namibia Holdings (Proprietary) Limited
(Skorpion). It also owns Black Mountain
Mining (Proprietary) Limited (BMM), whose
assets include the Black Mountain mine
and the Gamsberg mine located in South
Africa. The Company has 100% ownership
in Skorpion and 74% ownership in BMM.
Gamsberg operation was commissioned
during the middle of FY2019 with trial
production starting in November 2018
followed by first shipment of concentrate in
December 2018. The Gamsberg project
represents one of the largest zinc deposits
in the world with reserves and resources
(R&R) of 185 million tonnes (14.3 million
tonnes of metal), and a mine life in excess
of 30 years.
Oil & gas sector
The Company’s Oil & Gas business, Cairn
India, is owned and operated by Vedanta
Limited. It is one of India’s largest
independent oil & gas exploration and
production companies, and indeed is the
country’s largest private producer of crude
oil. 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: one block
in Rajasthan, one on the west coast of
India, three on the east coast of India and
one in South Africa. The Government of
India has granted its approval for a 10-year
extension of the PSC for the Rajasthan
block, RJ-ON-90/1, subject to certain
conditions.
The Company has secured 41 exploration
blocks under the Open Acreage Licensing
Policy (OALP). Revenue-sharing contracts
have been signed and applications for
petroleum exploration licences have been
submitted for all 41 blocks. The contractual
process has been initiated for end-to-end
services in all 41 blocks.
Aluminium sector
The Company’s Aluminium business is
owned and operated by Vedanta Limited
and Bharat Aluminium Company Limited
(BALCO), in which Vedanta has a 51%
interest with the balance owned by the
Government of India. Vedanta’s aluminium
operations include an Alumina refinery and
a 90MW captive power plant (CPP) at
Lanjigarh, and two smelters (500kt &
1,250kt) and two CPPs (1,215MW &
1,800MW) at Jharsuguda, both at Odisha in
Eastern India. BALCO’s operations include
two bauxite mines, four CPPs (270MW,
540MW, 600MW and 300MW), and
refining, smelting and fabrication (570kt)
facilities in Central India.
90
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
Commercial power sector
The Company’s Power business is owned
and operated by Vedanta Limited and
Talwandi Sabo Power Limited (TSPL), a
wholly owned subsidiary of Vedanta. TSPL
has signed a power purchase agreement
with the Punjab State Power Corporation
Limited (PSPCL) for the establishment of
thermal coal-based commercial power
facilities generating 1,980MW (three units
of 660MW each).
Further assets operated by the Group in
the power sector include:
• Vedanta Limited’s 600MW thermal
coal-based commercial power facility at
Jharsuguda;
• a 300MW thermal coal-based
commercial power facility at BALCO;
during the year 300MW IPP was
converted to CPP based on an order
received from Chhattisgarh State
Electricity Regulatory Commission
(CSERC) dated 1 January 2019;
• 274MW of wind power plants
commissioned by HZL; and
• a 100MW power plant at MALCO Energy
Limited (MEL), situated at Mettur Dam in
Tamil Nadu in Southern India. This plant
was put under care and maintenance,
effective 26 May 2017.
Iron ore sector
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 located in the
states of Goa and Karnataka. The annual
mining allocation for Karnataka has
increased to 4.5 million tonnes during
FY2019. On 7 February 2018, the Supreme
Court of India passed its final order, setting
aside the second renewal of the mining
leases granted by the state of Goa. The
Court directed all leaseholders under the
second renewal to stop all mining
operations with effect from 16 March 2018
until fresh mining leases and fresh
environment clearances are granted. We
continue to engage with the Government
for the resumption of mining operations.
MANAGEMENT REVIEW However, in February 2019, the Hon’ble
Supreme Court set aside NGT’s order on
the grounds of maintainability and directed
the Company to file a writ petition before
the Madras High Court, challenging the
impugned orders and to seek interim relief
considering that Vedanta Limited’s plant
had been shut since the end of March
2018. The Company has duly filed a writ
petition before Madras High Court
challenging the various orders passed
against the Company in 2018 and 2013.
The Madras High Court has directed the
State of Tamil Nadu and TNPCB to file their
counter to the Company’s petition for
interim relief and has posted the matter for
hearing on 11 June 2019.
The Company also owns and operates,
through its subsidiary CMT, the Mt. Lyell
copper mine in Tasmania, Australia
(currently suspended and under care &
maintenance since July 2014), and a
precious metal refinery and copper rod
plant in Fujairah, UAE, through its subsidiary
Fujairah Gold FZE.
Other interests
The Company’s other activities include a
100% interest in the Vizag General Cargo
Berth Private Limited (VGCB). This port
business includes coal handling facilities
and general cargo at the outer harbour of
Visakhapatnam Port on India’s east coast.
The Company also owns a 100% interest in
Avanstrate Inc (ASI), which manufactures
LCD glass substrate.
Steel sector
Vedanta Limited completed the acquisition
of 90% of the share capital of Electrosteel
Steels Limited (ESL) on 4 June 2018,
following which we have consolidated the
financials of ESL for a 10-month period in
FY2019. ESL has a design capacity of
2.5mtpa in Bokaro, Jharkhand with blast
furnace/basic-oxygen-furnace technology.
ESL’s current operating capacity is 1.5mtpa
with a diversified product mix of wire rod,
rebar, DI pipe and pig iron.
Copper sector
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 include 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.
Smelting operations at Tuticorin have been
halted since April 2018. Through an order
dated 9 April 2018, the Tamil Nadu Pollution
Control Board (TNPCB) rejected the
Consent to Operate (CTO) of the Tuticorin
Plant and issued a direction for the closure
and disconnection of the power supply at
the plant. In May 2018, the Government of
Tamil Nadu issued orders with a direction
to permanently seal the existing copper
smelter plant. In December 2018, in
response to Vedanta Limited’s appeal to
the National Green Tribunal (NGT) against
these orders, NGT set aside the Tamil Nadu
Government’s order and directed TNPCB
to renew the CTO, directing that the
impugned orders were unsustainable and
closure of the unit unjustifiable.
Above right: A loading and unloading facility
Above left: Electrosteel Steel Plant
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
91
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Finance review
Growth projects on track, strong base for future
Executive summary: We had a strong
operational and financial performance in
FY2019. During the year we completed the
acquisition of ESL which will complements
our Iron Ore Business through vertical
integration. Our ramp up plans for growth
projects are all on track and with that we
have a firm base for an even stronger
performance next year.
In FY2019 we recorded an EBITDA of
`24,012 crore, 4% lower y-o-y and a robust
adjusted EBITDA margin of 30%. (FY2018:
`24,900 crore, margin 35%).
Production volumes contributed to an
increase in EBITDA of `955 crore, which
was primarily on account of ramp up of
volumes at aluminium and volume addition
from ESL acquisition. However, this was
partially offset by lower volumes at Zinc
India and at Zinc International.
Market factors resulted in net incremental
EBITDA of `632 crore compared to FY2018.
The increase was primarily driven by rupee
depreciation but was partially offset by
input raw material inflation and lower
commodity prices.
Gross debt as on 31 March 2019 was
`66,226, crore, an increase of `8,067 crore
from March 31, 2018, primarily due to the
acquisition debt for Electrosteel Steels and
temporary borrowings at Zinc India.
Net debt increased to `26,958 crore at
31 March 2019 from `21,969 crore at
31 March 2018, primarily due to the
acquisition debt for ESL in FY2019.
The balance sheet of Vedanta Limited
continues to remain strong with cash
equivalents, liquid investments and
structured investment, net of the deferred
consideration payable for such investment
of `39,268 crore and Net Debt to EBITDA
ratio at 1.1x, which is the lowest among
Indian peers.
CONSOLIDATED EBITDA
EBITDA decreased by 4% in FY2019 to
`24,012 crore. This was mainly on account
of shutdown of the Tuticorin smelter, input
commodity inflation, lower metal prices,
and higher cost of production. This was
partially offset by ramp up of volumes at
aluminium, volume addition from ESL
acquisition, improved oil prices and rupee
depreciation.
(` crore, unless stated)
FY2019
FY2018
% change
11,298
10,600
698
7,656
2,202
1,527
584
791
(235)
189
13,669
12,254
1,415
5,429
2,654
1,665
400
–
1,055
28
24,012
24,900
(17)%
(13)%
(51)%
41%
(17)%
(8)%
46%
–
–
–
(4)%
(` crore)
24,900
(523)
(2,236)
3,203
87
101
955
(1,021)
(1,454)
24,012
"We recorded a strong
operational and financial
performance in FY2019"
Arun Kumar GR
Whole-Time Director &
Chief Financial Officer
CONSOLIDATED EBITDA
Consolidated EBITDA
Zinc
–India
–International
Oil & Gas
Aluminium
Power
Iron Ore
Steel
Copper India
Others
Total EBITDA
CONSOLIDATED EBITDA BRIDGE
EBITDA for FY2018
Market and regulatory: `632 crore
a) Prices, premium / discount
b) Direct raw material inflation
c) Foreign exchange movement
d) Profit petroleum to GOI at Oil & Gas
e) Regulatory changes
Operational: `(66) crore
f) Volume
g) Cost and marketing
h) Others
EBITDA for FY2019
92
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW A) PRICES, PREMIUM/DISCOUNT
Commodity price fluctuations have a
significant impact on the Group’s business.
During FY2019, we saw a net negative
impact on EBITDA of `523 crore due to
commodity price fluctuations.
Zinc, lead and silver
Average zinc LME prices during FY2019
dropped to US$2,743 per tonne, down 10%
y-o-y; lead LME prices decreased to
US$2,121 per tonne, down 11% y-o-y; and
silver prices decreased to US$15.4 per
ounce, down 9% y-o-y. The collective
impact of these price fluctuations lowered
EBITDA by `1,864 crore.
Aluminium
Average aluminium LME prices decreased
to US$2,035 per tonne in FY2019, down 1%
y-o-y; this had a negative impact of `212
crore on EBITDA.
Oil & Gas
The average Brent price for the year was
US$70.4 per barrel, higher by 22%
compared with US$57.5 per barrel during
FY2018, this was further supported by a
lower discount to Brent during the year
(FY2019: 6.1%; FY2018: 12.3%). These
positively impacted EBITDA by `1,553 crore.
B) DIRECT RAW MATERIAL INFLATION
Prices of key raw materials such as
imported alumina, thermal coal, carbon
and caustic have increased significantly in
FY2019 and this had an adverse impact on
EBITDA of `2,236 crore.
C) FOREIGN EXCHANGE
FLUCTUATION
Our operating currencies (the Indian rupee
and South African rand) both depreciated
against the US dollar during FY2019.
Depreciation of currencies are favourable
to the Group’s EBITDA, given the local cost
base and predominantly US dollar-linked
pricing.
Favourable currency movements increased
EBITDA by `3,203 crore compared to
FY2018.
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),
reduced by `87 crore. The reduction was
primarily due to the higher recovery of
capital expenditure over the previous year.
E) REGULATORY
During FY2019, regulatory changes had a
cumulative positive impact on the Group
EBITDA of `101 crore.
Information regarding key exchange rates against the US dollar:
Average
year ended
31 March
2019
Average year
ended
31 March
2018
69.89
13.76
64.45
13.00
As at
31 March
2019
69.17
14.48
As at
31 March
2018
65.04
11.83
% change
8%
6%
Indian rupee
South African rand
F) VOLUMES
Higher volumes contributed to an increase
in EBITDA of `955 crore, generated through
these key Group businesses:
Aluminium (positive `454 crore)
In FY2019, the Aluminium business
achieved record production of 1.96 million
tonnes, up 17% y-o-y due to the ramp up of
the Jharsuguda smelters. This volume
increase had a positive impact on EBITDA
of `454 crore.
Electrosteel (positive `791 crore)
Vedanta Limited completed the acquisition
of 90% of the share capital of ESL on
4 June 2018. This acquisition had a positive
impact on EBITDA of `792 crore.
Power (positive `186 crore)
The power business contributed positively
to EBITDA by `186 crore. This was mainly
due to TSPL, which was impacted by a fire
incident in the coal conveyor in Q1 FY2018.
Zinc India (negative `473 crore)
The integrated zinc metal production stood
at 696kt, lower by 12%, although this was
offset by record lead and silver production
of 198kt and 679 tonnes respectively. This
had a cumulative negative impact on
EBITDA of `473 crore.
G) COST AND MARKETING
Higher costs resulted in a fall in EBITDA by
`1,021 crore over FY2018, primarily due to
volume-led absorption at Zinc India and
Zinc International and purchase of power
from external sources in aluminium due to
coal supply disruption during FY2019.
H) OTHERS
This primarily includes the reduction in
EBITDA due to the shutdown of the
Tuticorin smelter.
Above right: Lab Activities at Gamsberg
Above left: Integrated facility at Jharsuguda
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
93
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Finance review
Continued
INCOME STATEMENT
Particulars
Net Sales/Income from Operations
Other Operating Income
EBITDA
Adjusted EBITDA margin1 (%)
Finance Cost
Investment Income
Exchange Gain /(Loss)
Profit before Depreciation and Taxes
Depreciation and Amortisation
Profit before exceptional items
Exceptional items2 : credit/(expense)
Taxes3
Profit after taxes after exceptional items
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 (` per share)
Basic EPS before exceptional items (` per share)
Basic EPS before exceptional items & DDT (` per share)
Exchange Rate (`/$) – Average
Exchange Rate (`/$) – Closing
(` crore, unless stated)
FY2019
FY2018
% Change
90,901
1,147
24,012
30%
5,689
3,618
(509)
92,011
912
24,900
35%
5,112
3,205
(38)
21,432
22,955
8,192
13,240
320
3,862
9,698
9,490
9,490
2,633
7,065
6,857
6,857
6,283
16,672
2,897
5,877
13,692
12,869
11,333
3,350
10,342
9,561
8,025
19.07
28.30
18.50
18.50
69.89
69.17
26.17
21.96
64.45
65.04
(1)%
26%
(4)%
–
11%
13%
–
(7)%
30%
(21)%
(89)%
(34)%
(29)%
(26)%
(16)%
(21)%
(32)%
(28)%
(15)%
(33)%
(29)%
(16)%
8%
6%
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 `112 crore on special items in FY2019 (FY2018: charge of `2,074 crore); DDT included in Tax Expense in FY2019 is `Nil crore (FY2018:
credit of `1,536 crore).
4) Previous period figures have been regrouped/rearranged wherever necessary to conform to current period presentation.
Below: Leveraging technology for growth
94
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW REVENUE
Revenue for the year was `90,901 crore, 1%
lower y-o-y. This was mainly on account of
shutdown of Tuticorin smelter, lower zinc
volumes and lower metal prices. This was
partially offset by ramp up of volumes at
aluminium, volume addition from ESL
acquisition, improved oil prices and rupee
depreciation.
EBITDA AND ADJUSTED EBITDA MARGIN
EBITDA for the year was `24,012 crore, 4%
lower y-o-y. This was mainly on account of
shutdown of Tuticorin smelter, input
commodity inflation, lower metal prices
and higher cost of production partially
offset by ramp up of volumes at aluminium,
volume addition from ESL acquisition,
improved oil prices and rupee
depreciation.
We maintained a robust adjusted EBITDA
margin of 30% for the year (FY2018: 35%)
DEPRECIATION AND AMORTISATIONS
Depreciation for the year was `8,192 crore
compared to `6,283 crore in FY2018, this
was mainly due to change in reserves
estimates and reversal of previously
recorded impairment at Oil & Gas business
in Q4 FY2018; a higher charge at Zinc India
due to higher ore production; a higher
charge at Zinc International due to start of
Gamsberg and higher ore production at
Skorpion and acquisitions of ESL and ASI.
NET INTEREST
The blended cost of borrowings was 8.1%
for FY2019 compared to with 7.8% in
FY2018.
The finance cost for FY2019 was `5,689
crore, 11% higher y-o-y compared to `5,112
crore in FY2018 mainly because of higher
gross debt due to ESL acquisition,
temporary borrowings at Zinc India and
higher average borrowing cost in line with
market trends partially offset by higher
capitalisation during the year.
Investment income for FY2019 stood at
`3,618 crore, 13% higher y-o-y compared to
`3,205 crore in FY2018. This was mainly
due to mark to market gains on a treasury
investment made by Vedanta’s overseas
subsidiary through a purchase of an
economic interest in a structured
investment in Anglo American Plc from its
ultimate parent, Volcan Investments
Limited and a one-time reclassification
from other comprehensive income to profit
and loss account at Zinc India. This was
partially offset by a lower investment
corpus.
Above: Employees during a tree plantation exercise
NET FIXED ASSETS
The net fixed assets as on 31 March, 2019
were `121,356. This comprises of `22,236
crore as capital work-in-progress as on
31 March 2019.
BALANCE SHEET
Our financial position remains strong with
cash and liquid investments of `39,268
crore.
The Company follows a Board-approved
investment policy and invests in high-
quality debt instruments with mutual funds,
bonds and fixed deposits with banks. The
portfolio is rated by CRISIL which has
assigned a rating of “Tier I” (meaning
highest safety) to our portfolio. Further, the
Company has undrawn fund-based
committed facilities of c.`6,400 crore as on
31 March 2019.
Gross debt as on 31 March 2019 was
`66,226 crore, an increase of `8,067 crore
from March 31, 2018. This was mainly due
to the ESL acquisition and temporary
borrowing at Zinc India. Gross Debt
comprises term debt of c.`43,200 crore
and short-term working capital loans of
c.`23,000 crore. The loan in INR currency is
92% and the balance 8% in foreign
currency. Average debt maturity is of term
debt is c. 3.2 years as at 31 March 2019.
CRISIL and India Ratings revised the
outlook on Vedanta’s Rating from AA/
Positive to AA/Stable.
EXCEPTIONAL ITEMS
The exceptional gains for FY2019 was at
`320 crore mainly on account of reversal of
previously recorded impairment of `261
crore in Oil & Gas business’s KG ONN block
and the reversal of a `59 crore charge
relating to arbitration of a historical vendor
claim pursuant to a Supreme Court Order,
in the Aluminium business.
TAXATION
Effective tax rate (before exceptional items
& DDT) for FY2019 was 28%, compared to
32% in FY2018.
The effective tax rate was lower on account
of change in profit mix across businesses.
ATTRIBUTABLE PROFIT AFTER TAX
(BEFORE EXCEPTIONAL ITEMS AND
DDT)
Attributable PAT before exceptional items &
DDT was `6,857 crore in FY2019 compared
to `8,025 in FY2018 (down 15% y-o-y).
EARNINGS PER SHARE
Earnings per share before exceptional
items & DDT for FY2019 were `18.50 per
share as compared to `21.96 per share in
FY2018.
DIVIDEND
Considering the total interim dividend of
`18.85 per share, the Board has decided
not to declare a final dividend in FY2019.
SHAREHOLDERS FUND
Total shareholders fund as on 31 March,
2019 aggregated to `62,297 crore as
compared to `63,312 crore as at 31 March
2018. This was primarily on account of
dividends paid during the year partially
offset by net profits attributable to equity
holders earned during the year.
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Zinc India
Ramp up to 1.2mtpa
mined metal capacity
on track
96
96
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE YEAR IN SUMMARY
The year witnessed a continued ramp up of
our underground mines, which delivered
mined metal production at 936kt. This was
29% higher y-o-y; virtually overcoming the
closure of open-cast operations in the
previous year. Lead and silver metal
production reached new records of 198kt
and 679 tonnes, respectively. Hindustan
Zinc was ranked 9th in the elite club of the
top 10 silver producers globally published
by the Washington-based Silver Institute
for the calendar year 2018.
The ramp up to 1.2 million tonnes per
annum (mtpa) mined metal capacity by
FY2020 is on track as capital projects
approach completion.
SAFETY
However, we were deeply saddened to
report seven fatalities at our Rajapura
Dariba, Zawar mines, Chanderia Smelter
and Debari smelting complex during the
year. The root causes of these tragic
incidents have been thoroughly
investigated and the resulting findings,
which include, among others making
better risk decisions and providing better
supervision during all activities have been
shared and implemented across the Zinc
India businesses to prevent such tragedies
in the future.
Our business had seen improving safety
performance in the last five years, where
our LTIFR had decreased by 24%. However,
this year has run counter to that trend and
during FY2019, the lost time injury
frequency rate increased to 0.63 (FY2018:
0.27).
Specific initiatives have been introduced to
instil a culture of safety. These include
forming a Safety Innovation Cell and a
Fatality and Serious Injury Prevention
Programme subcommittee, as well as
themed drives on reducing man-machine
interactions; mine fire safety; a mining-
mate competency assessment; a safety
maturity assessment; and a second party
safety audit.
We also collaborated with global safety and
protection experts Du Pont on our
‘Aarohan’ journey to excel in our process
safety management. Together we have
developed a structured programme aimed
at mitigating the risks of serious injuries and
fatalities in our processes.
6
34
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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
97
"Successful transition to underground mining, with record production from underground mines. Continued momentum in silver production led to 9th rank globally."Sunil DuggalCEO, Hindustan Zinc LimitedMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Zinc India
PRODUCTION PERFORMANCE
Production (kt)
FY2019
FY2018
% change
Total mined metal
Underground mines
Open cast mines
Refinery metal production
Refined zinc – integrated
Refined lead – integrated1
Production – silver (in tonnes)2
936
936
–
894
696
198
679
947
724
223
960
791
168
558
(1%)
29%
–
(7%)
(12%)
18%
22%
1. Excluding captive consumption of 6,534 tonnes in FY2019 vs. 6,946 tonnes in FY2018.
2. Excluding captive consumption of 34.2 tonnes in FY2019 vs. 36.4 tonnes in FY2018.
PRICES
Average zinc LME cash settlement prices US$/tonne
Average lead LME cash settlement prices US$/tonne
Average silver prices US$/ounce
2,743
2,121
15.4
3,057
2,379
16.9
(10)%
(11)%
(9)%
FY2019
FY2018
% change
UNIT COSTS
Unit costs (US$ per tonne)
Zinc (including royalty)
Zinc (excluding royalty)
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
FY2019
FY2018
% change
1,381
1,008
1,365
976
1%
3%
(` crore, unless stated)
FY2019
FY2018
% change
20,656
10,600
51%
22,050
12,254
56%
(6)%
(13)%
–
Below: Employees working in HZL
Underground Mine
ENVIRONMENT
Over the reporting year, the business
improved its hazardous waste recycling,
which rose to 52% from 42% in FY2018. Our
water recycling rate remained consistent at
35% (FY2018: 35%).
With the success of implementing the 20
million litres per day (MLD) sewage
treatment plant (STP), Phase 2 of 40MLD
STP is under commissioning, of which
25MLD will be commissioned in Q1
FY2020. On completion, it will reduce our
fresh water intake at our operational sites.
Solar power projects of 22MW were
commissioned during the year, and we
intend to further enhance our solar energy
footprint in the coming year.
We are also committed to the Science
Based Target initiative, to reduce by 2026
our absolute Scope 1 and 2 GHG emissions
by 14%, and absolute Scope 3 GHG
emissions by 20%, measured against the
2016 base-year.
Our sustainability activities received several
endorsements during the year, including the
CII-ITC Sustainability Award (‘Outstanding
Accomplishment’), as well as awards for
Sustainable Business of the Year and the
Sustainability Disclosure Leadership Award
from the World CSR Day. Zinc India’s
sustainability performance was ranked No.5
in the Dow Jones Sustainability Index (Metal
and Mining) globally, and No. 1 globally in
the Environment category. We were also
selected as an Index Constituent of the
Emerging Index ‘FTSE4Good’ series 2018.
First dry tailing plant
to be commissioned
in FY2020 at
Zawar Mines
98
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MANAGEMENT REVIEW PRODUCTION
REFINED ZINC/LEAD
(kt)
4
0
9
1
6
8
1
1
8
0
6
9
4
9
8
15
16
17
18
19
PRODUCTION
SALEABLE SILVER
(tonnes)
9
7
6
8
5
5
3
5
4
5
2
4
8
2
3
15
16
17
18
19
EBITDA
(` crore)
5
8
2
7,
5
9
4
6
,
4
5
2
,
2
1
0
0
6
0
1
,
0
3
5
9
,
15
16
17
18
19
In a challenging environment, silver prices
declined by 9% against the prior year,
slipping to US$15.4 per ounce in FY2019. A
slowing Chinese economy, coupled with
rising US interest rates, an equity market
bull run and global trade tensions all took
their toll on the price performance.
Unit costs
Zinc’s cost of production (excluding
royalty) for FY2019 was US$1,008 per
tonne, higher by 3% y-o-y. Production cost
was impacted by higher mine
development, input commodity inflation
and long-term wage settlement (LTS)
related expense but was partly offset by
higher acid credits and rupee depreciation.
Including royalties, the total cost of zinc
production increased to US$1,381 per
tonne, 1% higher y-o-y.
Of this figure, government levies amounted
to US$389 per tonne (FY2018: US$423 per
tonne). This comprised mainly of royalty
payments, the Clean Energy Cess,
electricity duty and other taxes.
FINANCIAL PERFORMANCE
Revenue for the year was `20,656 crore,
down 6% y-o-y, primarily on account of
lower zinc metal production and lower LME
prices, partially offset by record lead and
silver volumes and rupee depreciation.
EBITDA in FY2019 decreased to `10,600
crore, down 13 % y-o-y. The decrease was
primarily driven by lower volumes and
higher cost of production partially offset by
rupee depreciation.
Projects
The mining projects we 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 increased by 12% to
43km in FY2019.
At the Rampura Agucha underground
mine, the ventilation system was
commissioned earlier in the year, liberating
the mine from ventilation issues for its
lifetime. The commissioning of the
mid-shaft loading system in October 2018
allowed waste hoisting to be carried out
through the shaft ahead of schedule,
leading to improved ore production. The
second paste-fill plant was completed
ahead of schedule in Q4 FY2019. The full
shaft commissioning is expected to
complete by Q2 FY2020, synchronising
with the completion of the crusher and
conveyor system.
OPERATIONS
Mined metal production for FY2019 was
936,000 tonnes compared to 947,000
tonnes in the prior year. The FY2019
production was entirely from underground
mines, which ramped up strongly by 29%,
driven by a 27% increase in ore production
and better grades. Therefore, despite the
closure of open-cast operations, total
mined metal production declined only
marginally from the year before.
Integrated metal production was 894,000
tonnes in line with mined metal production,
7% lower than the previous year’s record
production of 960,000 tonnes. Integrated
zinc production was lower by 12%, in line
with the availability of zinc mined metal and
the higher lead ratio in ore. Integrated lead
and silver production stood at a record
198,000 tonnes and 679 tonnes, higher by
18% and 22%, respectively. This was driven
by higher lead mined metal production and
retrofitting of a pyro-metallurgical smelter
to produce more lead and better silver
grades. This smelter was retrofitted during
the year to produce more lead metal, in the
light of the higher availability of lead mined
metal, leading to higher lead production.
Hindustan Zinc was ranked 9th in the elite
club of top 10 silver producers globally
published by the Washington-based Silver
Institute for the calendar year 2018. Further,
during the year we received environment
clearance to increase silver production
from 600 tonnes per annum to 800 tonnes
per annum at the Pantnagar plant.
PRICES
FY2019 was a turbulent year for base
metals, caused by uncertainty from
international trade disputes, a slowdown in
manufacturing activity and the negative
impact of a stronger dollar. The average
zinc price during the year was US$2,743
per tonne, 10% lower than the previous
year’s average of US$3,057.
Zinc market fundamentals remain robust
with global zinc consumption expected to
grow by 1.5% to 14.5 million tonnes in the
calendar year 2019, with smelter supply
increasing to 14 million tonnes and mine
supply likely to be 13.9 million tonnes
(source: Wood Mackenzie). According to
demand-supply fundamentals, the zinc
price should improve since metal stocks
are at an all-time low and may continue to
remain so.
In a similar story to zinc and other base
metals, the lead price was volatile during
the year, rising and falling in response to
developments in international trade
disputes between the US and its trading
partners. Lead averaged US$2,121 per
tonne in FY2019, down 11% y-o-y.
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During the year, Sindesar Khurd received
environment clearance to produce 6.0
million tonnes of ore and 6.5 million tonnes
of ore beneficiation. The new 1.5mtpa mill
was commissioned smoothly and began
production in Q3 FY2019, taking the total
milling capacity to 6.2mtpa. The
underground crusher and production shaft
were commissioned during Q4 FY2019 and
ore hoisting from the shaft is expected to
start in Q1 FY2020. The second paste-fill
plant is under mechanical completion and
expected to commission in Q1 FY2020.
With a substantial improvement in
infrastructure, Zawar has reached a
run-rate of c.3.5mtpa. The new 2.0mtpa
mill was commissioned in Q4 FY2019,
taking the total milling capacity at Zawar to
4.7mtpa. Meanwhile, the dry tailing plant is
under execution and expected to
commission in Q2 FY2020.
The Rajpura Dariba mine has received
environmental clearance to increase ore
production from 0.9 to 1.08mtpa and is
seeking regulatory approval for further
expansion to 2.0mtpa. The ore production
run-rate is already at 1.2mtpa following the
major infrastructure enhancement. During
the year, orders were placed for a new
1.5mtpa mill and paste-fill plant; these are
expected to complete in FY2020.
OTHER PROJECTS
The Fumer project at Chanderiya is
expected to commission in Q1 FY2020.
The 22MW solar plant was completed
during Q3 FY2019 at Rampura Agucha
taking the total solar capacity there to
38MW.
OUTLOOK
Mined metal production, and finished
metal production is expected to be around
1 million tonnes. The cost of production
excluding royalty is expected to be <
US$1000 per tonne. The project capex for
the year will be in the range of US$350 to
US$400 million.
The 25MLD Sewage Treatment Project at
Udaipur will be commissioned in Q1
FY2020, taking the total capacity to
45MLD. This will play a key role in improving
water availability at Dariba and treat over
half of Udaipur’s sewage.
Further in line with the structural growth in
mined metal production and with improved
silver grades, we can expect to deliver
significant growth in silver volumes. The
silver volumes for FY2020 are in the range
of 750 tonnes to 800 tonnes.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• ramp up underground mines to 1.2mtpa
design capacity;
• de-bottleneck and expand smelting
capacity to maintain mines/smelter
synergies at higher levels of production;
• use advanced technology, automation
and digitalisation to structurally reduce
cost of production by improving
equipment productivity, metal recoveries
and operational efficiency; and
increase R&R through higher exploration
activity and new mining tenements.
•
EXPLORATION
Successful exploration in FY2019 added to
reserves and resources (R&R), providing
opportunities for extended mine life and
production growth. Across all the sites,
surface drilling increased to 181km and
underground drilling of 26km was achieved
during the year.
In comparison with the previous year’s
mineral resource and ore reserve
statements:
There is an overall net depletion of 13.1
million tonnes of ore reserves to 92.6
million tonnes, and a net 4.8 million tonnes
increase of exclusive mineral resources to
310.4 million tonnes.
Total contained metal in ore reserves is
7.2 million tonnes of zinc, 2.1 million tonnes
of lead and 280 million ounces of silver.
The exclusive mineral resource contains
18.5 million tonnes of zinc, 6.8 million
tonnes of lead and 685 million ounces of
silver.
At current mining rates, the R&R underpins
a mining life of more than 25 years.
100 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Planning for the next
phase of expansion to
1.35mtpa underway
Below: Zinc processing plant at Dariba, HZL
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Zinc International
Potential for >500ktpa
zinc production
102
102
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW learned, following a thorough investigation,
have been shared across the business and
our control of critical risks related to
equipment selection and business partner
on-boarding have been strengthened. Lost
time injuries have shown an increase from
16 to 23 for the year, with the frequency rate
also showing an increase to 1.89 (FY2018:
1.36). This is largely due to an increase in
activity at Gamsberg. Injury severity rates
continue to decrease year on year.
The business has taken steps in driving
Safety as the Number One Value across the
business. The value will strengthen
partnerships with our employees and
Business Partners in achieving Zero Harm.
Dust control remains a main focus area in
order to reduce lead and silica dust
exposures of employees, which will also
further sustain the number of employees
withdrawn over the last few years (from 25
in FY2016 to 7, 8 and 8 over the last three
years). Participation in the VCT drive for
HIV/Aids programmes for both employees
and business partners was well attended,
with 2,767 tests conducted during FY2019.
THE YEAR IN SUMMARY
FY2019 was a milestone year for Zinc
International. We ramped up production
from Pit 112 at Skorpion and completed our
flagship Phase I Gamsberg project.
As per the mine plan, we have substantially
completed pre-stripping of Pit 112 and will
be able to access the ore body and fully
ramp up production in FY2020.
The Gamsberg operation was
commissioned during the middle of
FY2019 with trial production starting in
November 2018, followed by the first
shipment of concentrate in December
2018. Gamsberg was formally inaugurated
by the President of South Africa, Mr. Cyril
Ramaphosa, and Vedanta Chairman,
Mr. Anil Agarwal, on 28 February 2019.
Ramp up to full capacity of 4mtpa of ore is
expected in 3-6 months.
With further ramp up of Gamsberg Phase I
and the Skorpion Zinc Pit 112 expansion,
Zinc International is expected to produce
more than 350,000 tonnes next year.
SAFETY
With deep sorrow, we reported a fatality at
Gamsberg project during the year, which
occurred during the construction phase
at the concentrator plant. The lessons
2
1
3
1
Gamsberg, South Africa
(under development)
2 Skorpion mine, Namibia
3 Black Mountain mine,
South Africa
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 103
"Gamsberg is now ramping up to its target ore throughput capacity of 4mtpa to produce 250ktpa metal. With Gamsberg Phase II mega pit production, we are expected to produce combined 450ktpa metal."Deshnee NaidooCEO, Zinc International and CMTMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Zinc International
ENVIRONMENT
During the period, Skorpion Zinc reported
one category 3 environmental incident
involving tailings overflow from one pond
due to a failed pump. The incident had a
limited environmental impact and is being
consistently and closely monitored.
Remedial actions include drilling of 4 – 6
boreholes for the recovery of contaminants
and monitoring purposes. The pond is also
being rehabilitated.
Gamsberg complied with the Biodiversity
Offset Agreement requirement on total
hectares of sensitive plant communities
impacted by securing four properties
measuring 21,900ha. The proclamation of
Gamsberg Nature reserve was also
announced on 26 November 2018.
.
PRODUCTION PERFORMANCE
Production (kt)
Total production (kt)
Production – mined metal (kt)
BMM
Gamsberg 1
Refined metal Skorpion
1 Includes trial run production of 10 KT
UNIT COSTS
Zinc (US$ per tonne) unit cost
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
FY2019
FY2018
% change
148
157
(5%)
65
17
66
72
–
84
(10)%
–
(22)%
FY2019
FY2018
% change
1,912
1,603
19%
(` crore, unless stated)
FY2019
FY2018
% change
2,738
698
25%
3,446
1,415
41%
(21)%
(51)%
–
Proclamation of
Gamsberg Nature
Reserve gazetted on
26 November 2018
Below: Lab activities at BMM Plant
104 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW PRODUCTION
REFINED ZINC
(mt)
2
0
1
2
8
5
8
4
8
6
6
15
16
17
18
19
PRODUCTION
ZINC/LEAD MINED METAL
(dmt)
9
0
2
4
4
1
0
7
2
7
2
8
15
16
17
18
19
EBITDA
(` crore)
2
8
0
,
1
7
2
9
1
4
4
5
1
4
,
1
8
9
6
15
16
17
18
19
OPERATIONS
During FY2019, total production stood at
148,000 tonnes, 5% lower y-o-y. This was
due to lower production at Skorpion
because of a two-week strike in March
2019, as well as lower zinc grades at
Skorpion (7.6% vs 8.2%) and lower
production at BMM due to lower than
planned grades and hence lower
recoveries. This was partially offset by the
commencement of production from
Gamsberg.
Skorpion’s production was 66,000 tonnes,
down 22% y-o-y, due to the planned
shutdown of the acid plant during Q1
FY2019, and lower than planned zinc
grades. Furthermore, the mining business
partner’s employees embarked on an
illegal strike from 22 February to 6 March
2019. The employees cited unresolved
labour matters with their employer. The
strike action lasted 14 days and had a
severe negative impact on mining activities
and the lead time to re-establish mining
operations. This resulted in the depletion of
run of mine ore inventory, with the
consequent effect of a temporary closure
of the refinery while re-establishing mining
buffers. Skorpion took this opportunity to
bring forward the annual shutdown
previously scheduled in Q2 FY2020. The
operations restarted in the second half of
April 2019.
At BMM, production was 10% lower than
the previous year. This decrease was
primarily due to lower than planned grades
and hence lower recoveries.
UNIT COSTS
The unit cost of production increased by
19% to US$1,912 per tonne, up from
US$1,603 in the previous year. This was
mainly driven by lower production at both
Skorpion Zinc and BMM, higher
amortisation of stripping costs of Pit 112 at
Skorpion Zinc, higher TCRCs and annual
inflation partially offset by local currency
depreciation, sulphur efficiencies, lower
oxide consumption at Skorpion Zinc and
higher copper credit at BMM.
FINANCIAL PERFORMANCE
During the year, revenue decreased by 21%
to `2,738 crore, driven by lower sales
volumes compared to FY2018 and lower
price realisations. The same factors along
with higher cost of production resulted in a
decrease in EBITDA to `698 crore, down
51% from `1,415 crore in FY2018.
PROJECTS
Gamsberg mining is continuing as per plan.
During the year, 41mt waste and ore has
been moved including pre-stripping and a
healthy stockpile of 1.0mt has been built up
for smooth feed to plant. Post-trial
production, the concentrator plant has
been progressively ramping up.
The focus for Gamsberg has been to fully
commission the plant, including all
automation and achieve an 80% plant
runtime which has been successfully
achieved in March 2019. This was despite
the stoppage of work and retraining of all
employees and business partners following
the fatality at Gamsberg in May 2018 as well
as commissioning issues which have since
been resolved.
In the case of Pit 112 at Skorpion Zinc over
75% of waste pre-stripping has been
completed and mining will come to end by
Q3 FY2020 with a stockpile built up to feed
plant for next 12 months.
We are at an advanced stage in concluding
feasibility for Gamsberg Phase 2 to
increase Gamsberg production capacity
from its existing 250,000 tonnes per
annum (ktpa) to 450ktpa. Investments in
this project are expected to be around
US$300 million.
EXPLORATION
During the year, we made gross additions
of 130.36 million tonnes of ore and 4 million
tonnes of metal to reserves and resources
(R&R), after depletion.
As at 31 March 2019, Zinc International’s
combined mineral resources and ore
reserves were estimated at 434 million
tonnes, containing 24.4 million tonnes of
metal. The reserves and resources support
a mine life of more than 30 years.
Zinc International is further pleased to
announce the declaration of a maiden
resource at its Big Syncline project, located
on its Black Mountain mining license in
South Africa. Resource estimation was
carried out by SRK Consulting (UK) and
resulted in an inferred resource of 151.7
million tonnes grading 3.6% (zinc and lead).
The majority of the resource is accessible
through open-cast operations at low
stripping ratios.
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Zinc International
OUTLOOK
In FY2020, we expect production volumes
to be in the range of 180-200kt from
Gamsberg, while the volumes from
Skorpion and BMM will be greater than
170kt. The cost of production excluding
Gamsberg is expected to be around
US$1,400 per tonne due to Skorpion’s Zinc
production ramp up due to access to high
grade ore from Pit 112, while the cost of
production Gamsberg is forecasted to be
around US$1000 per tonne.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• ramp up of Gamsberg Phase I
production in H1 of FY2020;
• complete the approval of Gamsberg
Phase 2; and
• complete the feasibility study for an
integrated smelter-refinery with 250ktpa
metal production.
106 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Combined mineral
resources and
ore reserves at
Zinc International
were estimated at
450 million tonnes
Above: We believe in participative learning
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 107
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Oil & Gas
Vision to contribute 50%
to India’s domestic
oil production
108 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
108
MANAGEMENT REVIEW SAFETY
There were 11 lost time injuries (LTIs) in
FY2019. The frequency rate stood at 0.30
(FY2018: 0.19), amid a significant increase in
activity due to development projects.
At the same time, we were proud that our
safety philosophy and management
systems were recognised with awards
conferred by a number of external bodies:
• Cairn Oil & Gas was recognised in the
CII-ITC Sustainability Awards 2018.
• Raageshwari Gas Terminal has been
awarded ‘Sword of Honour’ from the
British Safety Council for excellence in
HSE management
• Bhagyam field received the Platinum
prize in the seventh FICCI Safety
Systems Excellence Awards 2018
(large-scale mining sector category).
• Cairn Oil & Gas won three awards in the
International Fire and Security Exhibition
and Conference (IFSEC) India.
• Raageshwari Gas Terminal and CB/OS-2
asset were certified for ‘5S’ by the
Quality Circle Forum of India (QCFI).
• Ravva asset achieved a Five Star Rating
in the CII-Southern Region Award for
HSE Excellence.
THE YEAR IN SUMMARY
During FY2019, we delivered a strong
operational and financial performance in
addition to execution of key contracts
across our portfolio of development
opportunities which are expected to add
significant volumes going forward.
In pursuit of our vision to contribute 50% of
India’s domestic crude oil production, we
continue to invest in growth projects in
order to monetise the resource base. The
Oil & Gas business has a rich project
portfolio comprising enhanced oil
recovery, tight oil, tight gas, satellite field
development, facility upgradation and
exploration and appraisal prospects. Most
of the projects are being executed under
an Integrated Development strategy
involving leading global oilfield service
companies and are on track to deliver
expected volume additions. 11
development drilling rigs are currently
deployed; 99 wells were drilled & 33 wells
hooked up during FY2019 in Rajasthan. We
are ramping up well drilling and hook up to
add volumes.
Further, in order to add additional resource
base, we entered into a Revenue-Sharing
Contract signed for 41 exploration blocks
through OALP-1 and also secured two
discovered small fields in DSF Round-2.
The new blocks are expected to add
significant resource potential to our
portfolio.
7
1
1
3
3
2
2
4
4
5
5
6
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 PR-OSN-2004/1 block
7 South Africa Block 1
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 109
"Revenue sharing contract signed for 41 exploration blocks through OALP-1 and these new blocks are expected to add significant resource potential to our portfolio"Ajay Kumar DixitCEO, Oil & GasMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Oil & Gas
ENVIRONMENT
Our Oil & Gas business is committed to
protecting the environment, minimising
resource consumption and driving towards
our goal of ‘zero discharge’. Our progress
was recognised in the fifth CII
Environmental Best Practices Award 2018
for Natural Gas Recovery, for zero flaring
during frack well milling in gas operations.
At the Rajasthan asset, our operations at the
Mangala, Bhagyam and Aishwarya fields
were recognised as ‘Noteworthy Water
Efficient Units’, in the ‘within fence category’
of the National Award for Excellence in
Water Management 2018 by CII.
.
PRODUCTION PERFORMANCE
Gross Operated production
Rajasthan
Ravva
Cambay
Oil
Gas
Net production – working interest 1
Oil
Gas
Gross production
Working interest production
Unit
FY2019
FY2018
% change
Boepd
Boepd
Boepd
Boepd
Bopd
Mmscfd
Boepd
Bopd
Mmscfd
Mmboe
Mmboe
188,784
155,903
14,890
17,991
178,207
63.5
119,798
114,214
33.5
68.9
43.7
185,587
157,983
17,195
10,408
177,678
47.4
118,620
114,774
23.1
67.7
43.3
2%
(1)%
(13)%
73%
0%
34%
1%
0%
45%
2%
1%
1Includes net production of 119boepd from the KG-ONN block, which is operated by ONGC. Cairn holds a 49% stake.
PRICES
Average Brent prices – US$ per barrel
70.4
57.5
22%
FY2019
FY2018
% change
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
(` crore, unless stated)
FY2019
FY2018
% change
13,223
7,656
58%
9,536
5,429
57%
39%
41%
–
Below: Employees at the Mangala Processing
Terminal, Barmer
11 development,
drilling rigs are currently
deployed; 99 wells
drilled & 33 wells
hooked up during
FY2019 in Rajasthan
110
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW PRODUCTION –
AVERAGE DAILY GROSS
Operated production(boepd)
1
7
6
,
1
1
2
3
0
7
,
3
0
2
6
2
9
9
8
1
,
7
8
5
5
8
1
,
4
8
7
,
8
8
1
15
16
17
18
19
EBITDA
(` crore)
9
5
6
8
,
3
1
0
4
,
9
7
5
3
,
6
5
6
,
7
9
2
4
5
,
15
16
17
18
19
OPERATIONS
Average gross production across our
assets was 2% higher y-o-y at
188,784boepd. Production from the
Rajasthan block was 155,903boepd, 1%
lower y-o-y. The natural reservoir decline
has been managed with gains accruing
from the new wells brought online.
Production from the offshore assets stood
at a combined 32,881boepd, higher by 19%
y-o-y, due to the gains from the Cambay
infill campaign.
RAJASTHAN BLOCK
Gross production from the Rajasthan block
averaged 155,903boepd in FY2019, 1%
lower y-o-y. This decrease was primarily
due to natural decline from the fields but
was partially offset by the gain realised
from new wells brought online as part of
Mangala infill, the Bhagyam & Aishwariya
EOR campaign, production optimisation
activities and augmentation of liquid
handling capacity at the Mangala
Processing Terminal (MPT).
At Rajasthan, 99 wells have been drilled as
part of the growth projects; of these 33 wells
have been brought online during FY2019.
Gas production from Raageshwari Deep
Gas (RDG) averaged 51.3 million standard
cubic feet per day (mmscfd) in FY2019,
with gas sales, post captive consumption,
at 35.6mmscfd.
The Government of India, acting through
the Directorate General of Hydrocarbons,
Ministry of Petroleum and Natural Gas, has
granted its approval for a 10-year extension
of the PSC for the Rajasthan block,
RJ-ON-90/1, subject to certain conditions,
with effect from 15 May 2020. The
applicability of the Pre-NELP extension
policy to the RJ Block PSC is currently
sub-judice.
RAVVA BLOCK
The Ravva block produced at an average
rate of 14,890boepd, lower by 13% y-o-y.
This was primarily due to natural field
decline, although this was partially offset by
production optimisation measures. The
Government of India, acting through the
Directorate General of Hydrocarbons,
Ministry of Petroleum and Natural Gas, has
granted its approval for a 10-year extension
of the PSC for the Ravva block, subject to
certain conditions.
CAMBAY BLOCK
The Cambay block produced at an
average rate of 17,991boepd in FY2019, up
by 73% y-o-y, supported by the gains
realised from the infill wells campaign
completed in Q1 FY2019.
PRICES
Brent crude oil averaged US$70.4 per
barrel, compared to US$57.5 per barrel in
the previous financial year. The oil price
rallied in the first half, owing to the high
compliance on the production cut by
OPEC and other producers, as well as
sanctions on Iran imposed by the US and a
steep decline in production from
Venezuela. This rally saw crude oil hitting a
four-year high in early October to touch
US$86.29 per barrel.
In the latter half of the year oil prices
declined due to the US Government’s
waivers to eight major importers of Iranian
crude, leading to an oversupply in the
market. However, the oil price started to
rebound in last quarter owing to the
production cut by OPEC and other
producer countries.
FINANCIAL PERFORMANCE
Revenue for FY2019 was 39% higher y-o-y
at `13,223 crore (after profit and royalty
sharing with the Government of India),
supported by a recovery in oil price
realisation. EBITDA for FY2019 was higher
at `7,656 crore, up 41% y-o-y in line with the
higher revenue.
The Rajasthan water flood operating cost
was US$5.1 per barrel in FY2019 compared
to US$4.6 per barrel in the previous year,
primarily driven by increased interventions
and production enhancement initiatives.
Overall, the blended Rajasthan operating
costs increased to US$7.6 per barrel
compared to US$6.6 per barrel in the
previous year, due to the ramp up in
polymer injection volumes and the
increase in commodity prices.
A. GROWTH PROJECTS
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
devised an integrated project development
strategy, with an in-built risk and reward
mechanism. This new strategy is being
delivered in partnership with leading global
oilfield service companies. Major contracts
have been awarded and execution has
started.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
111
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Oil & Gas
I) MANGALA INFILL, ENHANCED OIL
RECOVERY (EOR) AND ALKALINE
SURFACTANT POLYMER (ASP)
The field is currently under full field
polymer injection. In addition, to
increase the ultimate oil recovery and
support production volumes, we are
executing a 45-well infill drilling
campaign in the field.
The valuable lessons gained from the
successful implementation of the
Mangala polymer EOR project, are
being leveraged to enhance production
from the Bhagyam and Aishwariya
fields. Till March 2019, 73 wells have
been drilled under enhanced oil
recovery projects across Mangala,
Bhagyam and Aishwariya, of which 33
are online.
Going forward, the Alkaline surfactant
polymer (ASP) project at Mangala will
enable incremental recovery from the
prolific Mangala field. The project entails
drilling wells and developing
infrastructure facilities at the Mangala
Processing Terminal. The contract for
drilling has already been awarded, while
the contract for the surface facility will
be awarded by Q1 FY2020.
II) TIGHT OIL & GAS PROJECTS
a) Tight oil: Aishwariya Barmer Hill
(ABH)
Aishwariya Barmer Hill (ABH) is the first
tight oil project to monetise the Barmer
Hill potential, and drilling started in Q1
FY2019. Currently, three rigs are
operational, and 20 wells had been
drilled by March 2019. Initial
deliverability from the two wells is in line
with expectations. We have successfully
drilled the longest lateral well of 1,355m
using advanced geo-steering
technology.
b) Tight gas: Raageshwari deep
gas (RDG) development
The RDG project is being executed
through an integrated development
approach to ramp up overall Rajasthan
gas production to ~150mmscfd, and
condensate production of 5kboepd.
The project entails developing surface
facilities and the drilling and completion
of 42 wells. The early production facility
is under commissioning and the
construction of the terminal is
progressing to plan. Up to March 2019,
six wells had been drilled.
III) OTHER PROJECTS
a) Satellite field development
An integrated contract for the
development of satellite fields is under
award.
b) Surface facility upgradation
The Mangala Processing Terminal (MPT)
facility upgradation is progressing as
per plan to handle incremental liquids.
Phase 1 of the intra-field pipeline
augmentation project was
commissioned in Q4 FY2019 and the
balance scope of Phase 1 to be
commissioned by Q1 FY2020.
IV) RAVVA DEVELOPMENT
An integrated contract for drilling
development wells is under award.
B. EXPLORATION AND APPRAISAL
RAJASTHAN – (BLOCK RJ-ON-90/1)
RAJASTHAN EXPLORATION
The Group is reactivating its oil & gas
exploration efforts in the prolific Barmer
Basin, which 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.
We have awarded an integrated contract
for a drilling campaign of 7-18 exploration
and appraisal wells to build on the resource
portfolio, with well-spud expected by Q1
FY2020.
TIGHT OIL APPRAISAL
The contract for the appraisal of four fields
(Vijaya & Vandana, Mangala Barmer Hill, DP
and Shakti) has been awarded, and will
include the drilling of 10 new wells. This will
also involve multi-stage hydraulic fracturing
and extended testing. Rigs are under
mobilisation and drilling is expected to
begin in Q1 FY2020.
KRISHNA-GODAVARI BASIN
OFFSHORE
Oil discovery was notified in the second
exploratory well (H2), and a further
appraisal will now be required to establish
its size and the commerciality of the oil
discovery.
The first exploration well drilled in the block
(A3-2) was a gas discovery. Evaluations are
ongoing.
RAVVA
In order to increase the reserve and
resource base, an integrated contract for
drilling exploratory wells is under award.
OPEN ACREAGE LICENSING POLICY
(OALP)
Under the Open Acreage Licensing Policy
(OALP), revenue-sharing contracts have
been signed for 41 blocks. These comprise
33 onshore and 8 offshore blocks with a
potential of ~1.4 to 4.2 billion boe of
resource, and are located primarily in
established basins, including some
optimally close to existing infrastructure.
We have issued a global tender, inviting
bids for an end-to-end integrated contract.
DISCOVERED SMALL FIELDS (DSF2)
Discovered small fields (DSF2) provide
synergy with existing oil & gas blocks in the
vicinity. These blocks were assessed based
on the resource potential and proximity to
infrastructure in prioritised sedimentary
basins across India. Two discovered small
fields named as Hazarigaon and Kaza gas
fields, located in Assam and Krishna
Godavari basins respectively, have been
awarded under DSF2.
OUTLOOK
Vedanta’s Oil & Gas business now has a
robust portfolio comprising a number of
exploration blocks with promising
prospects, a large pool of development
projects and prolific producing fields. Our
energies are focused across these
opportunities, and as we execute our
development projects we expect to deliver
a progressive increase in production
volumes.
The closure of growth projects contracts
with global vendors took longer than
envisaged impacting near term volumes.
We have however locked in contracts at
attractive prices and returns. For FY2020,
with the increase in drilling activities and
wells hook up, we expect the production
volumes to be in the range of 200-220
kboepd. Opex during the year is expected
to be c.-US$7.5/boe.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• continue to progress towards ‘zero harm,
zero waste and zero discharge’;
• continue to operate at a low cost-base
and generate free cash flow post-capex;
• execute growth projects within schedule
and cost;
• continue progress on execution of
projects to achieve targeted production
of 270-300kboepd; and
• evaluate further opportunities to expand
the exploration portfolio through OALP
and other opportunities.
112
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW
PSC for Rajasthan and
Ravva block extended
for 10 years, subject to
conditions
Above: Cairn offshore rig Suvali
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 113
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Aluminium
Strong and growing portfolio
of value-added products
114
114
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE YEAR IN SUMMARY
In FY2019, the aluminium smelters
achieved an all-time-high production of
1.96 million tonnes (including trial run).
Despite some headwinds facing cost of
production – mainly input commodity
inflation, global disruptions in alumina
supply and temporary coal disruptions in
the domestic market – we were supported
by higher alumina production volumes at
Lanjigarh and rupee depreciation. We are
focusing on optimising our controllable
costs and improving our price realisation to
improve profitability in a sustainable way.
The cost of production for Q4 FY2019 was
US$1,776 per tonne, on account of
structural improvements in the cost due to
increased local bauxite supply, ramped up
alumina volume and improved coal
materialisations.
We also achieved record production of 1.5
million tonnes at the Alumina refinery
through debottlenecking. We continue to
explore the feasibility of expanding the
refinery’s capacity, growing through a
phased programme and subject to bauxite
availability.
SAFETY
We experienced 15 lost time injuries during
the year (FY2018: 22), and the frequency
rate decreased to 0.23 from 0.39. We have
delivered specialist skill and competency
training in areas such as crane and lifting
operations, vehicles and driving. Root
cause analysis training was also given to
the heads of department and maintenance
heads, in order to investigate the injuries
and high-potential incidents in order to
avoid these lapses in the future.
Focusing on building a culture of care, a
programme of ‘Visible Felt Leadership’ has
been launched, with management at plants
spending more time on the shop-floor to
pre-empt and address safety issues.
At BALCO, in order to increase safety
awareness and to interact with business
partners, workers and their families,
programmes such as care-drives (seven in
number) and ‘Suraksha ki goth’ have been
organised within the plant. Additionally, the
Company has kick-started a training
programme on practising life-saving
behaviours. About 8,000 employees and
business partners have received this
training.
In a significant achievement, the Lanjigarh
refinery achieved zero-LTIs for the third
consecutive year, and we seek to replicate
its success across the business.
3
1
2
Lanjigarh Alumina refinery
1
2 Jharsuguda smelter
3 Korba smelter
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 115
"In FY2019, we achieved record production of Alumina and India’s highest production of Aluminium"Ajay KapurCEO – Aluminium & PowerMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Aluminium
ENVIRONMENT
The review of our tailings dam structures
was completed by Golder Associates and
we are studying recommendations to
increase the structures’ stability.
Separately, we recycled 14% of the water we
used in the year (FY2018: 11%) and our
BALCO operations saw a marginal
improvement in their specific water
consumption of 0.72 m3/MT (FY2018: 0.74
m3/MT). In Lanjigarh, as part of waste
management, 101% of fly ash and 97% of
lime grit was recycled.
PRODUCTION PERFORMANCE
Production (kt)
FY2019
FY2018
% change
Alumina – Lanjigarh
Total aluminium production
Jharsuguda I
Jharsuguda II1
BALCO I
BALCO II2
1,501
1,959
545
843
260
311
1,209
1,675
440
666
259
310
24%
17%
24%
27%
–
–
Including trial run production of 60.5kt in FY2019 vs. 61.8kt in FY2018.
1.
2. Including trial run production of nil in FY2019 vs. 16.1kt in FY2018.
PRICES
Average LME cash settlement prices (US$ per tonne)
2,035
2,046
(1)%
FY2019
FY2018
% change
UNIT COSTS
Alumina cost (ex-Lanjigarh)
Aluminium hot metal production cost
Jharsuguda CoP
BALCO CoP
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
(US$ per tonne)
FY2019
FY2018
% change
322
1,940
1,938
1,945
326
1,887
1,867
1,923
(1)%
3%
4%
1%
(` crore, unless stated)
FY2019
FY2018
% change
29,229
2,202
8%
23,156
2,654
11%
26%
(17)%
–
Below: Smelter at Jharsuguda
First full-scope
implementation of
SAP S/4HANA in the
Metals & Mining
sector in the world,
enabling the
organisation to be
ready for the next
level of digitisation
116
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW 9
5
9
,
1
5
7
6
,
1
TOTAL
(kt)
3
1
2
,
1
3
2
9
7
7
8
15
16
17
18
19
4
5
6
,
2
6
0
3
,
2
2
0
2
,
2
EBITDA
(` crore)
7
1
5
,
2
4
5
6
15
16
17
18
19
In FY2019, the CoP of hot metal at
Jharsuguda was US$1,938 per tonne, up by
4% from US$1,867 in FY2018. The
equivalent CoP figure at BALCO increased
to US$1,945 per tonne, up by 1% from
US$1,923 in FY2018.
This was primarily driven by volatility in
global alumina prices due to supply
disruptions and input commodity inflation
(mainly carbon). The global alumina price
indices generally traded higher than prices
in the past years. The power cost was
higher due to disruptions in domestic coal
supply from Coal India, resulting in
procurement of coal from alternative
sources at higher prices and power import
from the grid. CoP was partially offset by
higher Lanjigarh alumina production and
currency depreciation.
The cost of production for Q4 FY2019 was
US$1,776 per tonne, significantly lower
compared to previous quarters on account
of structural improvements in the cost due
to increased local bauxite supply from
OMC meeting over 50% of our Q4 FY2019
requirements, increase captive alumina
production from the Lanjigarh refinery. The
peak run rate at Lanjigarh refinery during
the year was 1.8mtpa.
Coal materialisation improved significantly
in Q4 FY2019, resulting in no power
imports from the grid in last four months of
FY2019. We have further secured 3.2
million tonnes of coal in the Tranche IV
auction and materialisation started in
March 2019. This will further improve coal
availability and therefore help drive costs
down.
FINANCIAL PERFORMANCE
During the year, revenue increased by 26%
to `29,229 crore, driven by volume ramp up
at Jharsuguda and rupee depreciation.
EBITDA was lower at `2,202 crore (FY2018:
`2,654 crore), mainly due to an increase in
cost of production partially offset by a write
back of liability pursuant to a settlement
agreement with a contractor at BALCO.
OPERATIONS
ALUMINA REFINERY: LANJIGARH
At Lanjigarh, production was 24% higher
y-o-y at 1.5 million tonnes, primarily through
plant debottlenecking. We continue to
evaluate the possible expansion of the
refinery, subject to bauxite availability.
Aluminium smelters
We ended the year with record production
of 1.96 million tonnes (including trial run).
Production from the Jharsuguda I smelter
was 24% higher y-o-y. This was primarily
due to lower volumes in 2018 due to a pot
outage incident in Q1 that affected 228
pots of the Jharsuguda-I smelter. These
pots were fully restored by Q3 FY2018.
Production from the Jharsuguda II smelter
was 27% higher y-o-y. This was mainly
driven by production stabilisation from the
ramp ups in the previous year. We continue
to evaluate Line 4 of Jharsuguda II smelter.
The BALCO I & II smelters continued to
show consistent performance.
Coal linkages
We continue to focus on ensuring the
long-term security of our coal supply, and
at competitive prices. We added 3.2 million
tonnes of coal linkages during FY2019 from
Tranche IV auctions. The materialisation of
Tranche IV began in March 2019. We have
also operationalised the captive coal block,
Chotia, at our BALCO operations. This takes
our coal security to 72% of our
requirements.
PRICES
Average LME prices for aluminium in
FY2019 stood at US$2,035 per tonne,
which was almost flat y-o-y. Prices were
volatile throughout the year driven by
global uncertainties, fuelled by sanctions
against Rusal and US-China trade war
concerns.
UNIT COSTS
During FY2019, the cost of production
(CoP) of alumina was flat y-o-y at US$322
per tonne. Benefits from an increase in
locally sourced bauxite from Odisha Mining
Corporation (OMC), improved plant
operating parameters and rupee
depreciation were offset by input
commodity inflation (mainly caustic soda
and imported bauxite).
In FY2019, the total bauxite requirement of
about 4.4 million tonnes was met by
captive mines (10%), OMC (31%), domestic
sources (20%) and imports (39%). In the
previous year, the bauxite supply mix was
captive mines (29%), domestic sources
(41%) and imports (30%).
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
117
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Aluminium
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• deliver Lanjigarh refinery production at
1.7-1.8 million tonnes and stable
aluminium production;
• enhance our raw material security of
•
•
•
bauxite & alumina;
improve coal linkage security, better
materialisation and continued
production at our Chotia mines;
improve our plant operating parameters
across locations; and
improve realisations by improving our
value-added product portfolio.
OUTLOOK
VOLUME AND COST
In FY2020, we expect production at our
Lanjigarh refinery of around 1.7-1.8 million
tonnes, with aluminium production at
smelters remaining stable.
As input commodity prices continue to be
volatile, we are looking at ways to optimise
our controllable costs, while also increasing
the price realisation in order to improve
profitability in a sustainable way.
The global alumina price indices remained
volatile during FY2019 and peaked in the
middle of the year but have since lowered
in recent months. We expect the global
alumina supply to improve as new refinery
volumes enter production and expect
prices to remain stable for the forthcoming
year.
At our power plants, we are also working
towards reducing GCV losses as well as
improving plant operating parameters
which should deliver higher plant load
factors (PLFs) and a reduction in non-coal
costs.
The hot metal cost of production for
FY2020 is expected to be in the range of
US$1,725 – 1,775 per tonne.
We aim to increase our value-added
production to 60% of our total sales for
FY2020.
118
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW Local bauxite expected
to meet 1/3rd of
the requirement for
FY2020
Above: Employees at integrated facility, Jharsuguda
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 119
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Power
3.3 GW of commercial
power generation capacity
120 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
120 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE YEAR IN SUMMARY
FY2019 was a significant year for the
Talwandi Saboo (TSPL) power plant, where
we achieved plant availability of c.88%.
However, the plant load factors for the
Jharsuguda and Balco IPP were impacted
by domestic coal shortages.
SAFETY
We report with deep regret a fatality during
the year, as the result of a vehicle accident
at our BALCO IPP. After a thorough
investigation, the lessons learned were
shared for implementation across all our
businesses. To enhance safety, a
segregated pedestrian pathway has been
completed throughout the coal truck
movement area, designed to reduce the
risk of accidents to passing pedestrians.
3
2
1
Jharsuguda power plant
1
2 Korba power plant
3 Talwandi Sabo Power plant
Captive thermal power plant
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 121
"Record plant availability of 88% at TSPL in FY2019"Ajay KapurCEO – Aluminium & PowerMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Divisional review
Power
PRODUCTION PERFORMANCE
Total power sales (MU)
Jharsuguda 600MW
BALCO 600MW 1
MALCO2
HZL wind power
TSPL
TSPL – availability
FY2019
FY2018
% change
13,515
1,039
2,168
–
449
9,858
88%
11,041
1,172
1,536
4
414
7,915
74%
22%
(11%)
41%
–
9%
25%
–
1 Continues to be under care and maintenance since 26 May 2017 due to low demand in Southern India.
2 We have received an order dated 1 January 2019 from CSERC for Conversion of 300MW IPP to CPP. During Q4
FY2019, 184 units were sold externally from this plant.
UNIT SALES AND COSTS
Sales realisation (`/kWh)1
Cost of production (`/kWh)1
TSPL sales realisation (`/kWh)2
TSPL cost of production (`/kWh)2
FY2019
FY2018
% change
3.4
2.9
4.1
3.1
2.9
2.3
3.5
2.5
17%
24%
16%
21%
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
Revenue
EBITDA
EBITDA margin (%)
1 Excluding one-offs
(` crore, unless stated)
FY2019
FY2018
% change
6,524
1,527
23%
5,652
1,665
25%1
15%
(8)%
–
Below: Power Plant at Jharsuguda
ENVIRONMENT
One of the main environmental challenges
for power plants is the management and
recycling of fly ash. At our BALCO IPP, 100%
of the fly ash was utilised at both the power
plants, up from 62% and 58% respectively in
the previous year. The plant also saw a
significant reduction in auxiliary power
consumption at 7.82% (FY2018: 8.14%). A
similar downward trend was achieved in
BALCO IPP’s specific water consumption at
2.20 m3/MwH (FY2018: 2.8 m3/MwH).
100% of fly ash
utilised at both
Balco IPPs
122
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW SALES
(Million kWh)
5
1
5
3
1
,
6
1
9
,
2
1
1
2
1
,
2
1
1
4
0
,
1
1
9
5
8
9
,
15
16
17
18
19
2
4
6
,
1
5
6
6
,
1
7
2
5
,
1
EBITDA
(` crore)
4
9
2
,
1
3
7
8
15
16
17
18
19
FINANCIAL PERFORMANCE
EBITDA for the year was 8% lower y-o-y at
`1,527 crore mainly due to an increase in
the cost of production due to higher coal
prices owing to supply disruption in the
domestic market. Further, the EBITDA for
FY2018 included a one-off revenue
recognition of `226 crore and `139 crore at
BALCO and at Jharsuguda IPP’s
respectively.
OUTLOOK
During FY2020, we will remain focused on
maintaining the plant availability of TSPL
above 80% and achieving higher plant load
factors at the BALCO and Jharsuguda IPP’s.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• resolve pending legal issues and recover
aged power debtors;
• achieve high PLFs for the Jharsuguda
•
and BALCO IPP; and
improve power plant operating
parameters to deliver higher PLFs/
availability and reduce the non-coal cost.
OPERATIONS
During FY2019, power sales were 13,515
million units, 22% higher y-o-y. Power sales
at TSPL were 9,858 million units with 88%
availability. At TSPL, the Power Purchase
Agreement with the Punjab State Electricity
Board compensates us based on the
availability of the plant.
The 600MW Jharsuguda power plant
operated at a lower plant load factor (PLF)
of 15% in FY2019.
The 600MW BALCO IPP operated at a PLF
of 53% in FY2019. We have received an
order dated 1 January 2019 from CSERC for
the conversion of 300MW capacity from
an Independent power plant (IPP) to a
Captive power plant (CPP).
The MALCO plant continues to be under
care and maintenance, effective from
26 May 2017, due to low demand in
Southern India.
UNIT SALES AND COSTS
Average power sale prices, excluding TSPL,
increased by 17% at `3.4 per kWh. This was
mainly due to better prices in the open
access market.
During the year, the average generation
cost was higher at `2.9 per kWh (FY2018:
`2.3 per kWh), driven by mainly increased
coal prices.
TSPL’s average sales price was higher at
`4.1 per kWh (FY2018: `3.5 per kWh), and
power generation cost was higher at `3.1
per kWh (FY2018: `2.5 per kWh) driven
mainly by increased coal prices.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 123
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Iron Ore
Record production of
4.1 million tonnes at
Karnataka in FY2019
124
124
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE YEAR IN SUMMARY
Operations in Goa continued to be
suspended in FY2019, and remain so, due
to a state-wide directive from the Supreme
Court. We continue to engage with the
Government to secure a resumption of
mining operations.
Production of saleable ore at Karnataka was
4.1 million tonnes, in line with the increase
in the mining cap for the state of Karnataka.
SAFETY
In continuing our journey to ‘zero harm’, the
lost time injury frequency rate (LTIFR) was
0.30 (FY2018: 0.12). During the year we
initiated new safety practices in our
organisations including ‘one man, one
lock’; deployment of trained rescue teams
for work at height and confined space;
training in making better risk decisions
(MBRD); crane lifting and rigger training;
and continuing a grid ownership concept
for improving EHS culture on the ground.
We also launched a dedicated safety app
for real-time reporting of safety issues as
well as tracking business leaders’ time
on-field which has proved highly
successful. Across all the sites, scores have
improved against the Vedanta
Sustainability Audit Programme (VSAP) and
Vedanta Safety Standards (VSS).
1
2
1
Iron Ore operations,
Goa
2 Iron Ore operations,
Karnataka
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 125
"Looking forward to restart our Goa Mine operations positively with all support from Government"Naveen SinghalCEO, Sesa Goa – Iron Ore BusinessMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Iron Ore
ENVIRONMENT
We recycle and reuse all of the wastewater
we generate in the Iron Ore Business, with
the exception of blow down from the power
plant which is treated and discharged
according to consent conditions. We have
also installed five fog cannon systems for
dust suppression and have installed a bag
filter at the charging car of the coke oven.
Our Iron Ore Karnataka business has started
biodiversity studies which are currently in
the Phase 2 stage. We have planted around
32,000 plants and also desilted around 1.17
lac m3 in 29 check dams and village ponds
round our business area.
PRODUCTION PERFORMANCE
Production(dmt)
Saleable ore
Goa
Karnataka
Pig iron (kt)
Sales (dmt)
Iron ore
Goa
Karnataka
Pig iron (kt)
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
FY2019
FY2018
% change
4.4
0.2
4.1
686
3.8
1.3
2.6
684
7.1
4.9
2.2
646
7.6
5.4
2.2
645
(38%)
(95%)
89%
6%
(49)%
(77%)
19%
6%
(` crore, unless stated)
FY2019
FY2018
% change
2,911
584
20%
3,162
400
13%
(8%)
46%
–
Below: Employees at operational site,
Sesa Iron Ore
Planted 31,970
plants and desilted
1.06 lac m3 in check
dams and village
ponds around our
business area
126
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW OPERATIONS
At Goa, production and sales volumes were
lower than the prior year due to the mine
closure. This was pursuant to the Supreme
Court judgment dated 7 February 2018
directing all companies in Goa to stop
mining operations with effect from
16 March 2018. We continue to engage with
the Government for a resumption of mining
operations.
FINANCIAL PERFORMANCE
In FY2019, revenue decreased to `2,911
crore, 8% lower y-o-y mainly due to lower
sales at Iron Ore Goa resulting from the
mine closure partially offset by increase in
sales volume at Karnataka and pig iron
prices during the year. EBITDA increased to
`584 crore compared with `400 crore in
FY2018. This was mainly due to higher
volumes at Karnataka.
At Karnataka, production was 4.1 million
tonnes, 89% higher y-o-y due to an
increase in the annual mining allocation.
Sales in FY2019 were 2.6 million tonnes,
19% higher y-o-y due to an increase in
production, but partially offset by muted
e-auction sales.
Production of pig iron increased by 6% to
686,000 tonnes in FY2019, mainly owing to
a lower metallurgical coke availability due
to weather-related supply disruptions in
Australia in Q1 FY2018, and a local
contractors’ strike in Q2 FY2018.
OUTLOOK
The production from Iron ore Karnataka is
expected to be 4.5 WMT (wet million
tonnes).
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• 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.
•
PRODUCTION
(Mt)
.
9
0
1
2
.
5
1
.
7
.
4
4
.
6
0
15
16
17
18
19
EBITDA
(` crore)
2
2
3
,
1
4
8
5
3
3
4
0
0
4
5
3
1
15
16
17
18
19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 127
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Steel
FY2019, a transformational year for
Electrosteel Steels Limited (ESL)
128
128
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW THE YEAR IN SUMMARY
Vedanta Limited completed the acquisition
of 90% of the share capital of ESL on
4 June 2018. ESL is an integrated steel plant
(ISP) in Bokaro, Jharkhand, with a design
capacity of 2.5mtpa. Its current operating
capacity is 1.5mtpa with a diversified
product mix of wire rod, rebar, DI pipe and
pig iron.
FY2019 was a transformational year for
Electrosteel Steels Limited (ESL). The
business achieved record production, sales
volume, EBITDA, EBITDA margin and free
cash flow generation. Indeed, FY2019
EBITDA margin of 19% was among the
sector leaders in India.
SAFETY
Since the acquisition by Vedanta, we have
started to implement the best safety
practices of the Vedanta Group to work
towards achieving ‘zero harm’. These
include:
• training and awareness programmes for
making better risk decisions (MBRD);
implementation of eight Vedanta safety
standards;
launch of Vedanta Sustainability Audit
Programme (VSAP); and
•
•
• focusing on Visual Felt Leadership (VFL).
We regard any safety incident as
unacceptable and preventable and
continue to work towards our zero harm
goal.
1
1
1 Electrosteel Steels plant, Bokaro
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 129
"Record production of 1.2 million tonnes during FY2019"PANKAJ MALHANDeputy Chief Executive Officer – Electrosteel BusinessMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Steel
PRODUCTION PERFORMANCE
ENVIRONMENT
Alongside 'zero harm', a main priority for ESL
is to achieve 'zero waste and zero discharge'
. In line with this, we have started on a
journey to achieve no discharges of water.
Production (kt)
Pig iron
Billet
TMT bar
Wire rod
Ductile iron pipes
PRICES
Pig iron
Billet
TMT
Wire rod
DI pipe
UNIT COSTS
Steel
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
1. Financial numbers are for a period of 10 months post acquisition
FY2019
FY2018
% change
1,199
142
39
441
427
150
1,025
179
50
300
365
130
17%
(21%)
(21%)
47%
17%
15%
(US$ per tonne)
FY2019
FY2018
% change
404
486
564
638
593
359
447
515
558
598
13%
9%
10%
14%
(1%)
(US$ per tonne)
FY2019
FY2018
% change
457
456
1%
(` crore, unless stated)
FY2019*
4,195
791
19%
Doubled EBITDA
margin during
the year
Below: TMT Bars produced by Electrosteels
Steels Limited
130 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW OPERATIONS
ESL’s manufacturing facility is a green field
integrated steel plant located near Bokaro,
Jharkhand, India, which has a current
capacity of 1.5mtpa and the potential to
increase to 2.5mtpa. It primarily consists of
two sinter plant, a vertical coke oven plant,
two blast furnaces, an oxygen plant, a lime
calcination plant, a steel melting shop, a
wire rod mill, a bar mill, a captive power
plant and a ductile iron pipe plant.
PRICES
Average sales realisation increased 12%
y-o-y from US$510 to US$572 per tonne in
FY2019. Prices of iron and steel are
influenced by several macro-economic
factors. These include government spend
on infrastructure, the emphasis on
developmental projects, demand-supply
forces, the Purchasing Managers’ Index
(PMI) in India and production and inventory
levels across the globe specially China.
UNIT COSTS
Coal prices and iron ore prices were higher
by 15% and 50% respectively over FY2018
despite which, the cost of production
stood flat at US$457 per tonne in FY2019.
This was managed through improvements
in key operational metrics which include
optimisation of lower grade iron ore fines,
improvement in coke rate consumption,
higher PCI consumption in blast furnaces,
lower consumption of pellets,
improvements in mill yields, commercial
excellence and tight control over costs.
FINANCIAL PERFORMANCE
Since its acquisition by Vedanta with effect
from June 2018, ESL has generated EBITDA
of `791 crore. Prudent cost management
and improvisation of key matrices played a
pivotal role for this turnaround story.
OUTLOOK
Hot metal production is expected to be
c.1.5mtpa in FY2020 and expected EBITDA
margin is US$130 to US$140 per tonne.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• obtain clean Consent to Operate and
environmental clearance;
• debottleneck the blast furnace, steel
melting shop & roll capacity, improving
production volume;
• gain raw material securitisation through
long-term contracts;
• re-brand value-added products and
enter the retail market for TMT;
• embark on the expansion journey from
1.5 to 2.5mtpa;
• ensure zero harm and zero discharge,
fostering a safety-centric culture; and
• focus on waste-to-wealth through
maximizing revenue from secondary
products.
Since June 2018, post Vedanta’s acquisition
of ESL, the business has seen significant
improvements leading to a healthy financial
position. There have been significant gains
in operational efficiencies, such as a
substantial reduction in the coke rate at
blast furnaces 2 & 3 by about 3% and 7%
respectively y-o-y; optimisation of the coal
mix and iron ore blending; and improved
yields of the finishing mill to 96.7% (from
95.9% in FY2018).
Prior to the acquisition, the saleable
production for the business was about
1mtpa.This was mainly due to a sub-optimal
use of assets, weak liquidity and limited
working capital that resulted in an
inadequate availability of resources. In
FY2019, we achieved record saleable
production of 1.2mtpa as a result of
operational excellence and restarting of
350 m3 Blast Furnace 3 in August 2018. In
line with our stated priorities to stabilize
production and ramp up to 1.5mtpa, we
achieved a hot metal production run-rate
of c.1.5mtpa in FY2019.
The priority remains to enhance production
of value-added products (VAPs), i.e. TMT
bar, wire rod and Di pipe, and to minimize
the production of non-value-added
products (NVAPs) i.e. pig iron and billets.
During the year, we shifted c.21%
production of NVAPs to higher margin
VAPs. TMT bar and wire rod production
increased by 47% and 17% respectively
y-o-y, driven mainly by improving yields at
the steel melting shop, higher availability of
hot metal and better efficiency at the mills.
Our Consent to Operate (CTO) for the steel
plant at Bokaro, which was valid until
December 2017, was not renewed by the
State Pollution Control Board (PCB). This
was followed by the Ministry of
Environment, Forests and Climate Change
revoking the Environmental Clearance (EC).
Both the directions have since been stayed
by the Hon’ble High Court of Jharkhand
until the next hearing date, which is due on
16 May 2019.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 131
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Copper – India/Australia
Government and
community engagement to
restart smelter operations
132
132
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW SAFETY
The lost time injury frequency rate (LTIFR)
was 0.15 (FY2018: 0.08). The primary
reason for the increase was the significant
decline in man-hours due to plant closure.
THE YEAR IN SUMMARY
The copper smelter plant at Tuticorin was
under shutdown for the whole of FY2019.
We continue to engage with the
Government and relevant authorities to
enable the restart of operations at Copper
India.
We continued to operate our refinery and
rod plant at Silvassa, catering to the
domestic market.
1
2
1 Silvassa refinery
2 Tuticorin smelter
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 133
"Our vision is to make Sterlite Copper, an integral part of the lives of the people in Thoothukudi and add value to the economic growth of our nation"PANKAJ KUMARChief Executive Officer – Sterlite CopperMANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Divisional review
Copper – India/Australia
PRODUCTION PERFORMANCE
ENVIRONMENT
Copper Mines of Tasmania continued in
care and maintenance awaiting a decision
on restart. Meanwhile, a small dedicated
team is maintaining the site and there were
no significant safety or environmental
incidents during the year. The site retained
its ISO accreditation in safety, environment
and quality management systems and the
opportunity of a lull in production was used
to review and further improve these
systems.
Production (kt)
India – cathode
PRICES
FY2019
FY2018
% change
90
403
(78)%
Average LME cash settlement prices (US$ per tonne)
6,337
6,451
(2)%
FY2019
FY2018
% change
FINANCIAL PERFORMANCE
Revenue
EBITDA
EBITDA margin (%)
(` crore, unless stated)
FY2019
FY2018
% change
10,739
(235)
(2)%
24,951
1,055
4%
(57)%
–
–
Silvassa refinery and rod
plants helping us cater
to the domestic market
requirements
Below: Employee at operational Site,
Sterlite Copper
134
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
MANAGEMENT REVIEW OPERATIONS
The Tamil Nadu Pollution Control Board
(TNPCB) vide order, dated 9 April 2018,
rejected the consent renewal application of
Vedanta Limited for its copper smelter
plant at Tuticorin. It directed Vedanta not to
resume production operations without
formal approval/consent (vide order dated
12 April 2018), and directed the closure of
the plant and the disconnection of
electricity (vide order dated 23 May 2018).
PRICES
Data from the International Copper Study
Group showed refined output and demand
growth estimates for 2019 indicating a
market deficit of 280kt. Wood Mackenzie
reported that the world refined copper
production for CY2019 will be 23.90 million
tonnes against 23.54 million tonnes in
CY2018, while refinery consumption is
estimated to be around 24.18 million tonnes
against 23.68 million tonnes in CY2018.
The Government of Tamil Nadu also issued
an order dated 28 May 2018 directing the
TNPCB to permanently close and seal the
existing copper smelter at Tuticorin; this
was followed by the TNPCB on 28 May
2018. Vedanta Limited filed a composite
appeal before the National Green Tribunal
(NGT) against all the above orders passed
by the TNPCB and the Government of
Tamil Nadu. In December 2018, NGT set
aside the impugned orders and directed
the TNPCB to renew the CTO.
However, in February 2019, the Hon’ble
Supreme Court set aside NGT’s order on
the grounds of maintainability and left it
open for Vedanta Limited to file a writ
petition before the Madras High Court
against all the above orders. The Hon’ble
Supreme Court has further left it open for
Vedanta Limited to apply for interim reliefs
considering that the plant has been shut
down since 09 April 2018, and to apply
before the Chief Justice of the High Court
for an expeditious hearing.
Vedanta Limited duly filed writ petitions
before the Madras High Court on
22 February 2019, which heard our
miscellaneous petitions seeking interim
relief on 1 March 2019. The court directed
the TNPCB and the Government of Tamil
Nadu to file their counters and scheduled
them for further hearing on 23 April 2019.
On 23 April 2019, the matter was posted for
further hearing on 11 June 2019.
Meanwhile, the Company’s Silvassa
refinery and rod plant continues to operate
as usual, enabling us to cater to the
domestic market.
Our copper mine in Australia has remained
under extended care and maintenance
since 2013. However, we continue to
evaluate various options for its profitable
restart, given the Government’s current
favourable support and prices.
Average LME copper prices decreased by
2% compared with FY2018.
FINANCIAL PERFORMANCE
During the year, EBITDA was `(235) crore
and revenue was `10,739 crore, a decrease
of 57% on the previous year’s revenue of
`24,951 crore. The reduction in revenue
and EBITDA was mainly due to the
shutdown of the Tuticorin smelter.
OUTLOOK
To be advised following the restart of
Tuticorin.
STRATEGIC PRIORITIES
Our focus and priorities will be to:
• engage with the Government and
relevant authorities to enable the restart
of operations at Copper India;
• sustain operating efficiencies, reducing
our cost profile; and
• continuously upgrade technology to
ensure high-quality products and
services that sustain market leadership
and surpass customer expectations.
PORT BUSINESS
Vizag General Cargo Berth (VGCB)
During FY2019, VGCB operations showed a
decrease of 8% in discharge and 5% in
dispatch compared to FY2018. This was
mainly driven by lower availability of railway
rakes in the region.
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Business Responsibility Report
136
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
STATUTORY REPORTS 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.
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
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.
In pursuance of its commitment to responsible business, the
Company has prepared this Business Responsibility Report
for its standalone divisions- Copper (Tuticorin, Silvassa),
Aluminium (Jharsuguda, Lanjigarh), Iron Ore (Sesa Goa, VAB,
IoK), and Oil & Gas. 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.
Above: Employees at operational site,
Vedanta Limited Jharsugda
SECTION A: GENERAL INFORMATION ABOUT THE COMPANY
1 Corporate Identity Number (CIN) of the Company
L13209MH1965PLC291394
2 Name of the Company
3 Registered address
4 Website
5 E-mail id
6 Financial Year reported
Vedanta Ltd.
1st Floor, ‘C’ wing, Unit 103, Corporate Avenue,
Atul Projects, Chakala, Andheri (East),
Mumbai – 400 093
http://www.vedantalimited.com/
ir@vedanta.co.in
sustainability@vedanta.co.in
April 1, 2018 – March 31, 2019
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
Copper, Aluminum, Iron Ore, Crude Oil & Natural gas
2
3
List three key products/services that the Company
manufactures/provides (as in balance sheet)
Total number of locations where business activity is
undertaken by the Company
a) Number of International Locations
a) 0
b) Number of National Location
b)
4 (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.
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Business Responsibility Report continued
SECTION B: FINANCIAL DETAILS OF THE COMPANY
1 Paid up Capital (`)
2 Total Turnover
372 crore
38,098 crore (revenue from operations)
3 Total profit after taxes (`)
5,075 crore
4 Total Spending on Corporate Social
1%
Responsibility (CSR) as percentage of profit
after tax (%)
5 List of activities in which expenditure in
4 above has been incurred:-
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
Above: At Sterlite Copper, skill-building
programs are a key component of our
CSR activities.
SECTION C: OTHER DETAILS
1 Does the Company have any Subsidiary
Yes
Company/ Companies?
2 Do the Subsidiary Company/Companies
Vedanta Ltd. has 8 subsidiaries – HZL, BALCO,
participate in the BR Initiatives of the parent
company? If yes, then indicate the number of
such subsidiary company(s)
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 Ltd. 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.
3 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%]
SECTION D: BR INFORMATION
1. Details of Director/Directors responsible for BR
Sl.
No.
Particulars
1 DIN Number (If applicable)
2 Name
3 Designation
4 Telephone Number
5 Email ID
138
Details
08364908
Mr Srinivasan Venkatakrishnan
Chief Executive Officer
+91 124 4593000
wir@vedanta.co.in
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS 2(a). 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
Above: Every action is
meticulously checked
to ensure safety.
P9 – Businesses should engage with and provide value to their customers and
consumers in a responsible manner
S.
No.
Questions
Do you have a policy/policies for:
1 Has the policy been formulated in consultation with the
relevant stakeholders?
2 Does the policy conform to any national/ international
standards? If yes, specify. (50 words)
3 Has the policy been approved by the Board?
Has it been signed by MD/ Owner/ CEO/ Appropriate Board
Director?
4 Does the Company have a specified committee of the Board/
Director/Official to oversee the implementation of the policy?
5 Indicate the link for the policy to be viewed online?
6 Has the policy been formally communicated to all relevant
internal and external stakeholders?
7 Does the Company have in-house structure
to implement the policy/policies?
8 Does the Company have a grievance redressal mechanism
related to the policy/ policies to address stakeholders’
grievances related to the policy/ policies?
9 Has the Company carried out independent
audit/evaluation of the working of this policy by an internal or
external agency?
NA = Not Applicable
P3
P4
P5
P6
P7
P8
P9
P1
Y
Y
Y
Y
Y
P2
N
NA
NA
NA
NA
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
https://www.vedantalimited.com/Pages/
CorporateGovernance.aspx?type=inv
Y
Y
Y
NA
NA
NA
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
Y
Y
Y
Y
Y
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.
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Business Responsibility Report continued
Above: Employees at Vedanta
Limited,Jharsugda’s office
Right: We believe in participative learning
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)
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.
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. Post delisting in the London Stock Exchange,
a Board-level Sustainability Committee has been
constituted at Vedanta Limited. It has come into
existence since April 1, 2019.
(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 Ltd. Annual Report. We also publish an
annual Sustainability Report based on GRI Standards.
Our sustainability reports can be found at:
http://www.vedantalimited.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.
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.
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
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
• 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 a project 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
GHG emission due to equivalent replacement of coal in
cement kiln.
In our Aluminium business, we have undertaken
programmes to ensure that we operate our potlines at
the high levels of efficiencies, reducing the amount of
coal being used, which has resulted in a decline in our
greenhouse gas emissions.
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.
Above right: Employees
engaged in tree
plantation, Balco
Below: Our nurseries ensure
high rates of plant survival in
our green-belt programs.
stakeholders can make use of to report anonymously
to the management. During the reporting period, a
total of 25 Whistle-blowing cases were reported. Of the
reported cases, only 1 was upheld and found correct,
leading to appropriate disciplinary actions including
warning, counselling, transfer and separation, against our
employees, contract workforce and vendors. About 101
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 test work 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.
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 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 95% 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.
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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
ENERGY AND WATER CONSUMPTION
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
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 have
committed to reducing our GHG intensity reduction of
16% by 2020 from a 2012 baseline.
Company Name
Sterlite Copper
Sesa Value Added Business
Aluminium – Lanjigarh
Aluminium – Jharsuguda
Oil & Gas
Specific Water Consumption
(Cubic Metre/tonne of Production)
Specific Energy Consumption
(Giga Joules/tonne of Production)
FY2019
FY2018
FY2017
FY2019
FY2018
FY2017
0*
2.28
1.83
0.37
1.0
6.57
2.12
2.22
0.47
1.13
6.63
1.79
2.03
0.49
1.38
0*
1.00
7.5
52.46
2.19
8.33
0.85
8.15
54.18
1.87
8.35
0.84
7.87
53.9
2.13
* Sterlite Tuticorin remained shut during the course of the fiscal year.
ii.
Reduction during usage by consumers (energy,
water) has been achieved since the previous year?
3.
Does the Company have procedures in place for
sustainable sourcing (including transportation)?
i.
If yes, what percentage of your inputs was sourced
sustainably? 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
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.
Vedanta adopts
strategies to
minimize our
resource use
and reduced
our water
and energy
consumption.
Right: Safety is our priority -
Employees ensuring safety truck
movement at BALCO.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
with Suppliers/vendors and contractors are also
encouraged to ensure conformance to the policies.
chain. In total, 93% of high volume and low potential waste
generated was recycled/reused into gainful applications.
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.
Additionally, Crude and Natural Gas from the Rajasthan
operations of our Oil & Gas business are transported
to our customers in Gujarat via a 600-km pipeline,
preventing the use of trucks for transportation,
thereby reducing pollution as well as the risk of road
safety incidents.
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
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, when the
plant was in operation, 103% 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, 116% 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 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. During FY2019, Cairn recycled 95% of the
produced water.
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 Please indicate the total number of employees
• Full time Employees: 9,328
2 Please indicate the total number of employees hired on
temporary/ contractual/ casual basis
• Contract: 28,056
• Total: 37,384
• Full time Employees Hired: 1,035
3 Please indicate the number of permanent women employees • Full time Women Employees: 1,085
4 Please indicate the Number of permanent employees with
• Not tracked
disabilities
5 Do you have an employee association that is recognised by
• Yes
management?
6 What percentage of your permanent employees is members
• We have recognised employee association at Sesa Iron
of this recognised employee association?
business only. 73%, the employees are a part of association.
7 Please indicate the Number of complaints relating to child
• Child labour/ forced labour /involuntary labour – Nil
labour, forced labour, involuntary labour, sexual harassment
in the last financial year and pending, as on the end of the
financial year.
9 What number of your under mentioned employees were
given safety & skill up-gradation training in the last year?
• Sexual harassment cases – 8; 7 cases upheld and found
correct; all 7 cases closed.
The total safety training given to employees, contract workers and
third-party visitors are given as below:
•
• Contract employees: 293,796 hours
•
Employees: 34,183 hours
Third party: 14,238 hours
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Principle 4: Engaging Stakeholders - Sustaining Value
Ours is an inclusive model where we value each and every
stakeholder and their opinion 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
Yes. The Company has conducted a 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.
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.
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 35,000 women
through SHG & skill-development initiatives. Of these,
more than 3,600 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.
2.
Out of the above, has the Company identified
the disadvantaged, vulnerable & marginalised
stakeholders?
1.
Does the policy of the Company on human rights
cover only the Company or extend to the Group/ Joint
Ventures/ Suppliers/ Contractors/ NGOs/ Others?
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.
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. We
144
Above: Women employees
at Sterlite Copper
Left: We encourage gender
diversity in all workstreams.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
All of our sites are
ISO 14001 certified
and committed
to managing our
environmental
impact
systematically.
Left: At Cairn’s Ravva Terminal,
impeccable housekeeping &
adherence to 5S keeps our
workplace productive & safe.
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.
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.
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 violations
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 life cycle.
Our Sustainable Development Framework includes an 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.
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.
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 evolving
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 strategise 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 Cairn
Oil & Gas business have committed to increase their
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 145
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Business Responsibility Report continued
Top: Our offshore well-pads are powered by renewable energy.
investment in solar power, while other businesses
have made significant improvements in their process
efficiencies, thereby reducing their GHG emissions.
As of March 31, 2019, we had been able to achieve an
12.86% reduction in our GHG intensity from our baseline
number. We will continue to focus on GHG emission
reduction efforts to ensure that we are able to meet our
commitment in FY2020.
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.
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 one of India’s largest solar operated
community-based RO Plant 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 hours of plant operations. The water
146
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, November 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.
No 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 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
licensing 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
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 Ltd. believes in promoting public policies and
regulatory framework that serve the common good
of the society.
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 FY2019, we
invested ₹51.72 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
focusses 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
Our philosophy
is that wherever
we operate
we add value
to the local
stakeholders.
Right: We promote SHGs under CSR
initiatives for empowering women.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 147
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Business Responsibility Report continued
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,
114 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. The project covers ~ 12,900 farmers
across Barmer, Baytu, Gudamalani and Sanchore block.
It has established ~1110 wadis by planting around 77,000
fruit saplings. The samplings have a 70% survival rate
across three blocks in Barmer district. ~15 lakh cubic meter
of water is harvested every year through the renovation of
15 community ponds (Nadis), construction of 681 Khadins
and roof top water harvesting in 85 rural schools.
The efforts have seen an increase in the floral and faunal
diversity of the region. Over 16 migratory bird species
seen to frequent pond sites. There has been a significant
rise in the population of fish, snakes, insects, algae, and
fungi. The project has also helped recycled ~6,000 tonne
of fertile soil.
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 FY2019, over 2,200 youths
acquired diverse skills and were placed. For example, in
Thoothukudi, Sterlite copper through its Tamira Muthukkal
project has provided vocational training to 2,000 youth
and currently covers more than 750 beneficiaries helping
them gain skills thus increasing their employability.
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.
In FY2019, more than 470 students went through our
training programme. This included 167 girls, who have
overall socio-economic growth and empowerment of
people, in keeping with the national and international
development agendas.
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 over 50,000 children.
Other programmes in the education space focus on
science, math and English learning in secondary schools.
Women’s Empowerment
Women’s empowerment is all about equipping and
enabling women to make life-determining decisions.
Vedanta recognises this need for empowering women
and is running several projects to help communities take
a step towards a more equitable future. The programmes
are associated with more than 7,400 women and
amongst them more than 1,700 women have started/
revamped their own micro enterprises. One of our
interventions in this space is the Subhalaxmi Cooperative
Society in Jharsuguda, which has emerged as a model
community-based organisation. The cooperative has
successfully completed 10 years of empowering women
since its inception and currently is touching the lives of
3,793 members in 71 villages. The cooperative, aided
by this programme, has been able to generate funds of
₹2.52 crore and there has been a significant increase in the
income of its members.
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
As a responsible
corporate citizen,
the Company
focusses on
ethical business
practices,with
inclusive
community
development
lying at the core of
its social initiatives.
Right: Jeevan Amrit Project by
Cairn Oil & Gas
148
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
taken to the sport quite enthusiastically. In the past, seven
alumni of SFA have played for the Indian national team
and eight are playing in the elite Indian Super League
2018-19 season.
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.
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 and the
details of the projects undertaken?
The total amount spent on all CSR activities and projects
during the FY2019 was `51.72 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
3.
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.
All our activities are focussed 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 FY2019.
2.
Does the Company display product 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
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-emphasises 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.
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.
Various approaches are used for 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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 149
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Directors’ Report
Dear Shareholders,
Your Directors hereby presents the report on the business
and operations of the Company, together with the audited
Consolidated as well as Standalone financial statements for the
financial year ended March 31, 2019.
COMPANY PERFORMANCE
During the year, your Company saw setting of new production
records across some of our businesses, commissioning of
a new Zinc mine, significant and successful inroads in our
Aluminium business and increase in our mineral and oil
resources and reserves. Our three large businesses – Zinc,
Aluminium and Oil & Gas achieved significant milestones at
low cost and are strongly positioned for the near-term targets
that we have set for these businesses.
We expect FY2020 to be another productive year with our
three key businesses well positioned. In the case of our
Zinc, Lead and Silver business, we will see the benefit of
increased volumes. In Oil & Gas, we are India’s largest private
producer of crude, and rank with the world’s lowest-cost
producers with production, development and exploration
pipeline. In Aluminium, we offer India’s largest production
capacity, supported by our own captive power generation
and increasingly integrating backwards for our own Alumina.
The strengths of our diverse portfolio, together with our
focussed growth strategy expanding our reserves and
resource base, a strong balance sheet, strong talent base,
technology and modernisation initiatives, all combine to create
a truly inspirational Company.
FINANCIAL HIGHLIGHTS FOR FY2019
Revenue
`90,901 Crore
(-1% y-o-y change)
FY2018: ` 92,011 Crore
Shutdown of Tuticorin
smelter partially offset by
Aluminium business ramp
up, ESL acquisition and
rupee depreciation
Crisil and India ratings
changed the outlook on
Company’s rating (CFR)
from ‘AA/Positive’ to
‘AA/Stable’
EBITDA
`24,012 Crore
(-4% y-o-y change)
FY2018: ` 24,900 Crore
Free cash flow (FCF)
post-capex
`11,553 Crore,
(47% y-o-y change)
FY2018: ` 7,880 Crore
Adjusted EBITDA margin
ROCE
30%
FY2018: 35%
c.13%
FY2018: 16.9%
Gross debt at
`66,225 Crore
(14% y-o-y change)
FY2018: ` 58,159 Crore
ESL acquisition and temporary
borrowing at Zinc India
Net debt at
`26,956 Crore
(23% y-o-y change)
FY2018: ` 21,958 Crore
Ever highest contribution
to the exchequer of
Strong financial position with
cash and liquid investments of
c. `42,400 Crore
`39,269 Crore
REVENUE
(` Crore)
EBITDA
(` Crore)
1
1
0
,
2
9
1
0
9
,
0
9
0
0
9
,
4
2
2
1
0
,
4
2
RETURN ON
CAPITAL
EMPLOYED
(` Crore)
9
.
6
1
8
.
2
1
FCF POST CAPEX
(` Crore)
NET DEBT
(` Crore)
GROWTH CAPEX
(` Crore)
3
5
5
,
1
1
0
8
8
,
7
6
5
9
,
6
2
8
5
9
,
1
2
4
6
7
,
7
9
6
4
,
5
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
150
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS REVENUE CONTRIBUTION - BUSINESS SEGMENTS
(` Crore)
PBIT CONTRIBUTION - BUSINESS SEGMENTS
(` Crore)
9
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FINANCIAL PERFORMANCE SUMMARY
In compliance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (Listing Regulations) the Company has prepared its standalone and consolidated financial statements as per
Indian Accounting Standards (Ind AS) for the FY2019.
Your Company’s standalone and consolidated financial highlights are provided below:
Particulars
Net Sales/Income from Operations
Profit from operations before other income, finance costs and exceptional items
Other Operating Income
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
(` in Crore)
Standalone
Consolidated
Year Ended
March 31,
2019
Year Ended
March 31,
2018
Year Ended
March 31,
2019
Year Ended
March 31,
2018
38,098
45,496
2,228
546
6,152
3,757
324
4,947
(128)
5,075
NA
NA
3,611
478
3,559
3,353
5,407
9,224
1,968
7,256
NA
NA
90,901
14,911
1,147
4,018
5,689
320
92,011
18,579
912
3,205
5,112
2,897
13,560
19,569
3,862
9,698
0
2,633
7,065
5,877
13,692
0
3,350
10,342
Net Profit after taxes, minority interest and consolidated share in profit/(loss) of associate
and before other comprehensive income
5,075
7,256
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
372
372
372
372
77,508
78,941
61,925
62,940
13.65
19.47
19.07
28.30
Nil
Nil
Nil
Nil
7,005
7,881
7,005
7,881
The financial results and the results of operations, including major developments have been further discussed in detail in the
Management Discussion and Analysis section.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 151
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
STATUTORY REPORTS
Directors’ Report continued
OPERATIONAL HIGHLIGHTS FOR FY2019
1
ZINC INDIA
• Record underground mined metal production at 936kt, up 29% y-o-y. Total mined metal production
marginally down 1% y-o-y, post closure of open-cast operations.
• Record lead metal production at 198kt, up 18% y-o-y.
• Record refined silver production at 679mt, up 22% y-o-y.
2
ZINC INTERNATIONAL
• At Gamsberg, commenced trial production in November 2018 and first shipment in December 2018.
3
4
OIL & GAS
• Average gross production of 189kboepd for FY2019, up 2% y-o-y.
• 11 development drilling rigs as at March 2019, with 99 wells drilled and 33 wells hooked up during
FY2019 in Rajasthan.
• Production Sharing Contract (PSC) of Rajasthan block extended for 10 years, subject to conditions.
ALUMINIUM
• Record aluminium production at 1,959kt, up 17% y-o-y.
• Record alumina production from Lanjigarh refinery at 1,501kt, up 24% y-o-y .
• Q4 FY2019 hot metal cost of production significantly lower at $956 /ton, lower by 12% q-o-q.
5
POWER
• Record PAF of 88% at the 1,980 MW TSPL plant in FY2019.
6
IRON ORE
• Goa operations remain suspended due to state-wide directive from the Hon’ble Supreme Court;
engagement continues with the Government for a resumption of mining operations.
• Production of saleable ore at Karnataka at 4.1 million tonnes, up 89% y-o-y.
7
STEEL
• Record annual steel production at 1.2 million tonnes for FY2019, up 17% y-o-y.
• Achieved hot metal production run rate of c.1.5mtpa in FY2019.
8
COPPER INDIA
• Due legal process being followed to achieve a sustainable restart of the operations.
152
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
SIGNIFICANT DEVELOPMENTS
ZINC INDIA
Zinc India has completely transitioned from open cast to
fully underground mining with the business creating new
records with mined metal production from underground
operations at 936kt, up 29% y-o-y. We are expecting
these volumes to increase to achieve the design capacity
of 1.2 mt. The business now ranks 9th in the Elite Club of
top 10 silver producers with a record production of 679
tonnes during the year, up 22% y-o-y.
ZINC INTERNATIONAL
Inaugration of Vedanta’s Gamsberg mine by President
Cyril Ramaphosa
On February 28, 2019, Vedanta announced inauguration
of Vedanta Zinc International’s (VZI) Gamsberg mine,
outside Aggeneys in South Africa’s Northern Cape
Province by President Cyril Ramaphosa, which represents
a US$400 million investment by Vedanta in South Africa.
OIL & GAS
Award of 41 exploration blocks in India pursuant to
Open Acreage Licencing Policy at a total bid cost of
US$551 million
Vedanta Limited was successfully awarded 41 exploration
blocks in sedimentary basins throughout India pursuant
to the Indian Open Acreage Licencing Policy (“OALP”) at
a total bid cost of US$551 million. The 41 blocks awarded
to the Company comprises of 33 onshore blocks and 8
offshore blocks.
OALP is the first major auction of hydrocarbon blocks
to take place in India since 2010 and provided an
opportunity for the Group to acquire new acreages from
all available areas in the sedimentary basins of India.
KG-OSN-2009/3 Discovery, Krishna-Godavari Basin,
India
Your Company announced a hydrocarbon discovery
in well A3-2 within its operated block KG-OSN-2009/3
within Krishna-Godavari Basin, East Coast of India.
Vedanta Limited holds 100% participating interest in the
block. A3-2 is the first exploration well drilled within the
KG-OSN-2009/3 block. Multiple reservoir zones were
encountered in the Mesozoic rift formation between
the depths of 3351-3944m MDBRT with indications of
hydrocarbon during drilling and formation evaluations.
ALUMINIUM
The business achieved an all-time-high aluminium
production at 1,959kt. We also achieved record
alumina production from Lanjigarh refinery at 1,501kt.
Structural changes put in place including increased
Bauxite sourcing reducing our reliance on imported
alumina, improved volumes from our alumina refinery,
better coal availability, linkage and coal stock on hand
and more efficient logistics have provided stability to
the operations.
KG-OSN-2009/3 Oil Discovery, Krishna-Godavari
Basin, India
During the year, your Company announced an Oil
Discovery in the second exploratory well H2, located
in the block KG-OSN-2009/3, Krishna-Godavari Basin,
East Coast of India. Vedanta Limited holds 100%
participating interest in the block. Multiple reservoir
zones were encountered in the well H2 within the
Mesozoic sequence between the depths of 3310m to
4026m with hydrocarbon indications during drilling and
down hole logging.
10 year PSC extension for Cairn, Oil & Gas operated
Rajasthan Block
During the year, we received approval from the
Government of India, acting through the Directorate
General of Hydrocarbons, Ministry of Petroleum and
Natural Gas for a ten-year extension of the Production
Sharing Contract (PSC) for the Rajasthan Block,
RJ-ON-90/1. The tenure of the RJ Block PSC has been
extended for an additional period of 10 years with effect
from May 15, 2020.
POWER
FY2019 was a significant year for the Talwandi Sabo
Power Limited (TSPL) plant, where we achieved record
plant availability of around 88%.
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IRON
During the year, operations in Goa remained suspended
due to a state-wide industry directive from the Supreme
Court. We continue to engage with and encourage the
Central and State Governments to resume production
given the benefits to all stakeholders. In this regard, we
welcome the efforts of the Goa Mining People Front and
FICCI to reopen the industry in Goa.
COPPER
Production from our copper smelter plant at Tuticorin
was suspended for the whole of FY2019. We continue
to engage with the Government, the relevant authorities,
the Courts and all stakeholders to enable the safe and
supported restart of operations.
Meanwhile, we continue to operate our refinery and rod
plant at Silvassa, catering to the domestic market.
CSR
Inauguration of 500th Nand Ghar reaching out to over
17,000 children
Your Company inaugurated 500th Nand Ghar at Chaksu
Block in Jaipur and reached out to more than 17,000
children and 15,000 women, through this programme,
aimed to lead the way for early childhood development in
Rajasthan, Uttar Pradesh and Madhya Pradesh. We have
also planned an outlay of `800 crore for setting up 4,000
Nand Ghars across India over next few years.
Through these 500 Nand Ghars, Vedanta is committed to
ensure a better future for children and women.
ACQUISITIONS
Acquisition of Electrosteel Steels Limited under IBC
Pursuant to a Corporate Insolvency Resolution
process implemented by way of the Insolvency and
Bankruptcy Code 2016, your Company acquired
Electrosteel Steels Limited, engaged in the business of
manufacturing of steel with a total current capacity of
1.5 million tonnes per annum (MTPA) with a potential
to increase the capacity to 2.5 MTPA. The operations
have seen a complete turnaround in the last 10
months after acquisition with the operations achieving
record production.
Your Directors believed that the acquisition will
complement the Company’s existing Iron Ore Business as
the vertical integration of steel manufacturing capabilities
has potential to generate significant efficiencies.
The detailed announcements made by the Company in this regard are available on the website of the Company at
www.vedantalimited.com
With these values being ingrained in Vedanta’s DNA, we
are proud to share that we have contributed c. 47% of our
turnover, i.e. c. `42,400 crore to the public exchequer of the
various countries where we operate.
Your Company publishes Tax Transparency Report which
provides an overview of the tax strategy, governance and tax
contributions made by the Company.
The report for the FY2019 is available on the website at
www.vedantalimited.com
DIVIDEND DISTRIBUTION POLICY
For bringing transparency and to protect the interest of
investors, your Company has in place a Dividend Distribution
Policy formulated in accordance with Listing Regulations
which sets out the parameters and circumstances to be
considered by the Board in determining the distribution of
dividend to shareholders and/or retaining profits earned by
the Company. The Policy is available on the website of the
Company at www.vedantalimited.com.
ECONOMIC RESPONSIBILITY
It has been another successful year for Vedanta as we
continue to deliver across our strategic priorities. We stay
focussed on contributing by way of economic value creation
and building trustworthy relations with the Governments and
other stakeholders.
FY 2018-19
Contribution to Public Finances
c. `42,400 Crores
FY 2018-19
Dividend paid to Government
`2,496 Crores
154
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
DIVIDEND
We have always believed in sharing the economic value
generated. A consistent dividend is a healthy sign of a growing
company. With a robust operational performance and a
complementary market environment, we returned impressive
numbers for FY2019.
RETURN TO SHAREHOLDERS
(` per share)
FY 18-19
FY 17-18
FY 16-17
FY 15-16
3.50
18.85
21.20
19.45
The Company has declared the following dividends during the year out of the reserves of the Company and in compliance with
the Dividend Distribution Policy:-
Type of Dividend
1st Interim Dividend
2nd Interim Dividend
Total
Date of Declaration
Record Date
October 31, 2018
November 10, 2018
March 6, 2019
March 14, 2019
Rate of Dividend per share
(face value `1 per share)
₹` 17.00
₹` 1.85
₹ `18.85
% Total Payout (in Cr.)
1700
185
₹ 6,320
₹ 685
The total dividend for the year stands at `18.85/- per equity
share representing a dividend yield of ~8% based on last
one-year average share price of the Company.
Further, the Board of Directors on October 10, 2018 have
approved payment of Dividend on 7.5% Redeemable
Non-Convertible Non-Cumulative Preference Shares (RPS)
of face value `10/- each for a period from April 01, 2018 to
October 27, 2018 as per the terms of issuance. These RPS
were issued and allotted on April 28, 2017 and were due for
redemption on October 27, 2018. The record date fixed for
the same was October 22, 2018.
The Directors have not recommend final dividend for the
financial year ended March 31, 2019.
The details of ratings provided by the agencies is provided in
the Corporate Governance Report.
SUSTAINABILITY
Sustainable Development is integral to Vedanta’s core
business strategy. We continue to be a transparent and
responsible corporate citizen; committed to a ‘social licence
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 our Sustainable
Development Model.
CREDIT RATING
Your Company is rated by CRISIL and India Rating and
Research Private Limited on its various debt instruments.
The model continues to be centered on the four strategic
pillars: Responsible Stewardship; Building Strong Relationships;
Adding and Sharing Value; and Strategic Communications.
• Responsible
governance supports
relationship building
• Relationships enable
us to contribute to a
wider society
RESPONSIBLE
STEWARDSHIP
BUILDING STRONG
RELATIONSHIPS
ADDING AND
SHARING VALUE
STRATEGIC
COMMUNICATIONS
• Value help us to
maintain a licence to
operate
• Enable us becoming
more transparent and
responsible corporate
citizen
These four pillars are critical to ensuring the long-term successful future of our business – meeting our strategic goals of growth, long-term value
and sustainability.
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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 businesses and its leaders
with 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
licence to operate’.
The Vedanta Sustainability Assurance Program (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 ten key safety
performance standards across the Group; VSAP process has
categorically focussed on compliance level to these standards
and highlighted areas of improvement.
During the year, we focussed 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 programmes 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 FY2019,
over 1.4 million hours of safety training were delivered to
employees and contractors.
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. We are
committed at ensuring that we develop our carbon reduction
strategies in alignment with the framework laid out by the
Taskforce on Climate related Financial Disclosures (TCFD).
A Carbon Forum has been internally 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, 2019, we had
been able to achieve about 14.6% reduction in our GHG
156
intensity from our baseline number. We are confident of
achieving our target by 2020.
Climate related financial risk is a part of our corporate risk
register and we believe that climate resilience is the best
approach we can take to safe guard our climate related
business risks.
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.
We remain committed to our agenda of “Zero Harm, Zero
Waste, Zero Discharge”. This year we were able to recycle more
than 111% 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 94% 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.
Lessons from our experience in Tuticorin continue to guide
us in improving engagement with our local stakeholders.
We have introduced revised stakeholder engagement and
grievance mechanism standards and have initiated several
projects to understand the perceptions and expectations of
local communities from Vedanta. We are hopeful that these
measures will help improve our social license to operate over a
period of time.
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.
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 priorities of its neighborhood communities
and also the national priorities including the Sustainable
Development Goals.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS For almost all our programmes, a bottom up community
engagement approach is 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, corporates, civil society
organisations & community-based organisations to carry out
durable and meaningful interventions.
All our CSR programmes are governed by the Vedanta CSR
Policy, Corporate Technical Standards 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
is led by senior business leaders comprising of CSR Heads &
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.
Vedanta has a strong Board CSR Committee including
senior Independent Directors. The Committee provides
strategic direction for CSR activities, and approves its
plans and budgets. It also reviews progress and guides the
CSR teams towards running well-governed and impactful
community programmes.
Brief overview on Community Development Programmes
for FY2019 is as under:
NAND GHAR AND CHILDREN’S
WELL-BEING PROJECTS
The importance of education for social growth and upliftment
is undisputable and for Vedanta this is a very important pillar of
its work with communities. Through our various education and
childcare initiatives, we reached to around 1.55 lakh children.
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. During this financial year, we were
proud to cross the 500 Nand Ghars mark, with 502 Nand
Ghars now operational in 4 states of the country. The key
metrics of their operational efficiency are tracked using an
online and custom designed application.
As part of the Khushi initiative, HZL, in partnership with
Government of Rajasthan strengthens the functioning of
3,089 ICDS Centres (called Anganwadis) in the 5 Districts
of Hindustan Zinc’s presence, reaching to over 60,000
children and caters to health, nutrition and pre-school need
of children in the formative 0-6-year age group. The project
also conducts periodic assessments to track developmental
metrics of the kids. This year an average increase of 11% in
children’s learning capability was identified through these
standardised assessments. Attendance also saw an increase
with the average attendance increasing from 44% two years
ago to 60% now.
Vedanta Limited Jharsuguda initiated a project called ‘Vedanta
Vidyarthi Vikas Yojana (VVVY)’ in the year 2009 to strengthen
the education standards of secondary school students
through remedial coaching classes. Since the beginning
of VVVY project, quality education has been provided to
the students of standard 8th to 10th and it’s going through a
remarkable growth in terms of quality education and passing
percentage of children. Till date total of 3,975 students have
been enrolled under VVVY project, 1,346 students appeared
in matriculation examination and 1,130 students successfully
passed with good marks.
WOMEN’S EMPOWERMENT
Women’s empowerment is all about equipping and
enabling women to make life determining decisions.
Vedanta recognises this need for empowering women and
is running various projects to help the communities take a
step towards a more equitable future. It is associated with
around 35,000 women (up from 28,000 last year) and
amongst them 3,600 women have started /revamped their
own micro enterprises. One of our interventions in this space
is the Subhalaxmi Cooperative Society in Jharsuguda which
has emerged as a model community-based organisation.
The Cooperative has successfully completed 10 years
of empowering women since its inception and currently
is touching the lives of 3,793 members in 71 villages.
Through this programme, the Cooperative has been able
to generate funds of `2.52 crore and through its various
activities it has seen a significant increase in the income
of the members.
HZL is running a similar programme called Sakhi which started
three years ago and now has 1922 SHGs connecting the
Company with 23,954 women. The total savings accumulated
through this project are now at `6.22 crore and the total loans
disbursed amounts to `17.13 crore, utilised for household
consumption, agriculture, health & sanitation and 492
women utilised the loans to create new enterprises or expand
existing enterprises.
HEALTH CARE
There is a great disparity in the quality and coverage of
medical treatment in India. The majority of rural population
lack basic primary healthcare and given that most of our
operations are also in rural areas, enabling rural communities
access to affordable and quality healthcare is an important
focus for us. The Vedanta Hospital at Lanjigarh continues to
provide much needed healthcare to thousands in the District
of Kalahandi, Odisha. This year, the hospital has seen a total
footfall of 67,425 patients, of which 6,935 were new patients
and 11,664 were old patients. Further, 12,980 patients were
treated through their Mobile Health Van.
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VMRF
To prevent, control and eradicate cancer and illnesses related to
it, Bharat Aluminium Company Limited (BALCO), a subsidiary of
Vedanta started Vedanta Medical Research Foundation (VMRF),
a voluntary, non-profit organisation. Balco Medical Centre, a
state-of-art oncology facility in Naya Raipur, is its first flagship
initiative. As the first super-specialty hospital with the capability
to treat cancer, Balco Medical Centre’s genuinely colossal
impact is validated by the reception it received from the people
and the milestones achieved – over 4,000 patients were
served, more than 230 patients underwent radiation, 250 plus
surgeries were performed and well past 1,000 chemotherapies
were carried out.
AGRICULTURE AND
ANIMAL HUSBANDRY
In much of rural India, the communities continue to rely heavily
on agriculture and animal husbandry. We therefore follow a
livelihood development approach of integrating agriculture,
dairy, water management, technology, farmer’s organisations
and market outreach. To increase the income of farming
community in Barmer through productivity enhancement
of agriculture and livestock, project Unnati, a Cairn CSR
initiative, was set up. More than 10,000 farmers benefitted
through various interventions like horticulture demonstrations,
construction & renovation of traditional water harvesting
structures like KHADIN, etc. In similar line, through project
SAMADHAN by HZL, the Company aims to improve the returns
from Agriculture & Livestock for about 30,000 families. By the
end of this year, the project had successfully worked with
8,660 farmers on agriculture and 8,944 farmers on livestock.
In Jharsuguda, to secure economic prosperity among
identified households of Siripali village, Jeevika Samriddhi
project was launched. The relevance of Jeevika Samriddhi
project is based on the need to augment irrigation
infrastructure, promotion of advanced agriculture, application
of bio-fertiliser and pesticides and making farming as a
remunerative profession. 111 farmers are benefiting from this
project and because of this project, the irrigation potential of
the village increased by 21.34%.
SKILLING THE YOUTH
To maximise the output from the immense demographic
dividend India has, it is imperative that the youth are trained in
skills suited for the current economic scenario. With the aim of
channelising this untapped potential the Company is running
a lot of skill development initiatives providing training to more
than 3,000 youths. Balco in partnership with IL&FS is providing
training to youth in five different high employment potential
trades – Hospitality, Welding Assistant, Industrial stitching, Fitter
Fabrication and Electrician. The institute has provided assured
employment opportunities to 7,800 students since the inception
of its operations. In Thoothukudi, Sterlite Copper through its
Tamira Muthukkal project has provided vocational training to
2,000 youth and currently covers 500 more beneficiaries helping
them gain skills thus increasing their employability.
A few other programmes ran by HZL, also aims at skilling
the youth of Rajasthan and increase their employability.
158
HZL’s Skilling and Entrepreneurship centres provide training
to youth to become Domestic Electricians, Security Guard,
General duty assistant, Sales entry and Data entry operators
and in Micro Finance. Currently, 160 students are being trained
and the plans are to train 700 youths each year. Through other
initiatives like the Mining academy, ITI training at Maruti,
BPO training, etc. the Company has been able to reach 559
youths this year.
ENVIRONMENT PROTECTION
& RESTORATION
In our operations we make it a priority to operate in harmony
with the natural environment. The Company is committed to
safeguard the environment and makes extensive efforts to
protect and restore nature. Pasumai Thoothukudi, an initiative by
Sterlite Copper, launched on the World Forest Day with a vision
of developing a green belt in Thoothukudi is an illustration of the
significance of this commitment for the Company. The Company
aims to plant 1 million trees and has already planted 800 saplings
within 10 days of the launch of the programme.
SPORTS & CULTURE
Sports, at an individual level, helps build character, benefits
health and for talented individuals becomes a source of
livelihood. However, it is at a societal stage where sports can
have a value-altering effect which can lead to a more tolerant
and inclusive society. Vedanta identifies this dual impact that
can be achieved through sports and thus its sports initiatives
are focussed on two main objectives; Sports for all and
Sports for excellence. Vedanta through its football initiatives
in Rajasthan by Hindustan Zinc Football Initiative (ZF), and in
Goa by the Iron Ore Business (Sesa Football Academy (SFA)),
established on a reclaimed mine has taken great strides in
getting closer to reaching these objectives. Zinc Football trains
around 2,000 kids, both girls and boys in its 64 Zinc football
schools. Sesa Goa also has 4 similar centres training 500 kids
on a weekly basis. These centres enable the game to reach
the masses and help create a culture of sports in the country.
Both academies have their centres of excellence with state-of-
art infrastructure that have not just developed players for their
respective state teams but also contributed to the national
setup with 7 alumni of SFA playing for the Indian national team
and 8 playing in the elite Indian Super League. The second
edition of ‘Vedanta Women’s Football League’ saw involvement
of 160 female football professionals and provided a platform
for them to showcase their talents.
COMMUNITY INFRASTRUCTURE
Infrastructure development provides impetus for economic
growth and it is no different for the villages in our operational
areas. It not only helps elevate the quality of life in the villages,
but also forms the foundation for socio-economical upliftment.
The Company recognises this need and therefore is aiding
the 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS During the year, the Company’s divisions spent `51.72 crore
on CSR activities, while on a consolidated basis it spent about
`309.24 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 at www.vedantalimited.com
DIGITISATION INITIATIVES - CSR
I. Unified & Online CSR Reporting Platform for the Group
Vedanta has a large and complex CSR portfolio with
multiple and diverse projects running across various
locations. During the year, we have worked with Goodera, a
global SaaS company, in assisting us with the development
of a CSR lifecycle and volunteering technology platform
that will assist in planning, managing, evaluating and
reporting on our Corporate Social Responsibility
(CSR) programmes.
The technology platform will enable Vedanta business
Units to continuously measure progress and impact of
CSR and volunteering projects, in real time, with last-mile
visibility through impact dashboards. While enabling
effective governance, this integrated technology platform
will also assist in maximising the impact of every rupee
spent via automation, intelligence and analytics for
data-driven decision-making.
The platform will also empower Vedanta with solutions to
engage employees across its geographies to create the
culture of giving and volunteering seamlessly.
II.
A web-enabled, online community grievance register –
‘NIVAARAN’
Nivaaran is our internal community grievance/requests
reporting and monitoring platform. This is an online
web-enabled system developed this year by our
Information Technology team. This central repository
platform primarily aims to enable the submission of
community requests/grievances from anywhere and
anytime (24x7) by our stakeholder and CSR teams,
who validate the request and take action for speedy
closure of the same. Tracking grievances/requests is also
facilitated on this portal through the system generated
unique registration number. It also enables analysis of
the data related to grievances across various categories
including – type of grievance/requests, resolution time,
location/asset etc.
CSR IMPACT ASSESSMENT
Taru Leading Edge assessed the impact of the CSR activities
of Vedanta Group in the states of Rajasthan, Uttarakhand,
Gujarat, Andhra Pradesh, Odisha, Chhattisgarh, Punjab, Goa,
Karnataka and Jharkhand. This study employed various primary
and secondary research techniques for comprehensive
data gathering to arrive at objective insights which would
assist in gauging the impact of the Company’s current
operational projects and help identify new interventions to
improve these projects. Taru, for this study, deployed trained
professionals to oversee the Survey, focus group discussions,
and perform in-depth interviews with the community
members, beneficiaries, government/local authority personnel
etc. To assess the investment made for development of
infrastructure, physical survey of the infrastructure was done.
Over 6,000 samples were collected for Impact assessment
along with 730 Key Informant Interviews/In-depth Interviews
and 240 Focus Group Discussions.
Overall, all sectoral interventions under thematic areas of
sustainable livelihoods, Health & Nutrition, Water, Sanitation
& Hygiene (WASH), Energy & Environment, Education and
Sports & Culture received positive feedbacks with around 60%
households reporting having benefitted from at least one of
the CSR interventions of the Vedanta Indian BUs.
Under the sustainable livelihoods, the CSR interventions
reached out to at least 46% of the CSR beneficiaries and
around 62% of these CSR beneficiaries reported an increase in
household income. Other impacts included benefits such as
Increase in yield and lifespan of livestock, more earning from
livestock, and generation of more employment opportunities.
The Health & Nutrition CSR interventions of various BUs
reached out to approximately 50% of the CSR beneficiaries
and around 76% of these beneficiaries reported that they were
able to save money on Medicine & Health and close to 70%
reported an improvement in Healthcare Quality.
The WASH, Energy & Environment CSR initiatives of Vedanta
Group were able to reach approximately 30% of the CSR
beneficiaries and more than 60% of these beneficiaries
reported impact and benefits such as improvement in
general cleanliness in the focus areas, availability of water at
home, women feeling safer with construction of toilet facility
in the house and improvement in school attendance after
construction of toilet in schools.
It was observed that through various interventions in
the Education thematic area, more than 80% of the CSR
beneficiaries reported an improvement in grades of children,
increased interest in going to school and improvement in
quality of education.
Vedanta Group has also implemented various other
programmes such as Community Centres, Road Safety
Programmes, Football Academy Project, Sports & Culture
etc. which are also appreciated by the community and have
created a positive impact.
INNOVATION, DIGITALISATION & TECHNOLOGY
Vedanta has made innovation a strategic priority by
acknowledging the role innovation plays as an enabler
across every facet of the business. Beyond this ideology,
Vedanta has instilled innovation as a corporate value and the
Group’s leadership supports and incentivises employees in
the establishment of a culture of innovation. This is because
Vedanta’s leadership believes that innovation, and not just
incremental improvement, will help mitigate the volatility
in commodity prices. Innovation, which encompasses
technology and digitalisation, drives efficiency and
sustainability. It is a central part of the Group’s drive for
operational excellence. We want to become an innovator
company and to do this, we are focussed on not only
acquiring best in class technology for our assets, but on
creating our own.
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Directors’ Report continued
Calling on two of our core values of entrepreneurship
and innovation, we have stepped up our efforts to
discover and implement new, innovative and disruptive
technologies through the introduction of new systems and
incentive programmes.
Across our business units, employees are encouraged to be
creative in their thinking and approach. Ideas are valued by
continually asking employees to think about what they and the
Group can do differently. More than 1,000 ideas have been
submitted, of these, 200 were selected for implementation
and are being rolled out across the Group.
with industry leading extraction techniques like enhanced oil
recovery and alkaline surfactant polymer, which have been
deployed at the Mangala field. Extensive use of digital oil field
software has improved reservoir management.
At Gamsberg, we have taken the application of technology a
step further. Gamsberg has been conceptualised to be a digital
mine. By introducing technology and digitalisation from the
start, the operation 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.
Of all the trends impacting the mining industry at
present, digitalisation is arguably the most crucial, given
its over-arching impact on every aspect of operations.
Offering significant potential for improving operational
efficiency and lowering costs, digitalisation is opening up
exciting opportunities at our several eading mines.
HUMAN RESOURCES (HR)
PEOPLE & CULTURE
Hindustan Zinc’s Sindesar Khurd mine is our most automated
mine and has successfully implemented mine digitalisation.
Here, we are moving into a new era of mining, where high
speed WiFi networks and high bandwidth optical fibre forms
the backbone of a new digital-enabled operating model.
Your Company 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 provide all our employees with a safe and
healthy work environment.
At our Oil & Gas business, the world’s longest,
continuously-heated and insulated pipeline is one example
of high technology standards. We remain ahead of the curve
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 on
personal as well as professional front.
VEDANTA VALUES THAT DRIVE THE ORGANISATION CULTURE ARE:
ENTREPRENEURSHIP
At Vedanta, our people are our most
important assets. We actively encourage
their development and support them in
pursuing their goals.
INNOVATION
We embrace a conducive environment
for encouraging innovation that leads to
a zero harm environment and
exemplifying optimal utilsation of natural
resources, improved efficiencies and
recoveries of by-products.
OUR VALUES
OUR VALUES
TRUST
We actively foster a culture of mutual
trust in our interactions with our
stakeholders and encourage an open
dialogue which 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.
RESPECT
CARE
EXCELLENCE
We lay consistent emphasis on human
rights, respect the principle of free, prior,
informed consent, while our
engagements with stakeholders give
local communities the opportunity to
voice their opinions and concerns.
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, zero waste and
zero discharge’ environment for our
communities.
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 business through a culture of
best practice benchmarking.
160
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS DIVERSITY
Diversity remains a strong focus. We are committed to provide
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 20% 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
representation amongst our employees.
BOARD DIVERSITY
Male
Female
80%
20%
EMPLOYEE DIVERSITY
89.4%
Male
Female
10.6%
We are also focussed on increasing the mix of geographies
and nationalities in our workforce. 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 team and
our employees are recruited from the country in which our
operations are located.
We strictly follow our Equal Opportunity policy to ensure
there is no discrimination and all our decisions are based
on meritocracy.
RECRUITMENT
We have put a range of initiatives in place to support us in
hiring skilled professionals.
Right management in place (RMIP)
To re-emphasise the Group’s philosophy of empowering the
SBUs, we have reviewed our existing Business & SBU structures
and followed a rigorous assessment process to ensure we
have right talent in the right positions. The RMIP process
also ensured that we have filled all the critical roles within
our structures and any gaps in the management team are
supported by strategic plans to fill vacancies. Our approach to
recruitment is focussed on hiring diverse, high quality talent as
well as expats and specialists.
Vedanta Leadership Development Program (VLDP)
VLDP is our flagship programme which aims to build
organisational capability through developing talented
individuals from premier management and technology
institutes. It is a tailored programme which focuses on
nurturing these bright minds to act as catalysts to steer
our business to the next level of growth by implementing
transformational ideas. The programme includes
induction sessions, cross functional projects in significant
roles, job rotation, development opportunities and
continuous anchoring.
TALENT MANAGEMENT AND
DEVELOPMENT
Internal Growth Workshops
We have always aimed to design an organisation
which is spearheaded by our “Leaders from Within”.
Recognising internal talent and recruiting them to leadership
roles has been the driving factor in our journey of rapid growth.
Aligned with this philosophy, the Group conducts ‘Chairman’s
Internal Growth Workshops’ which enable our young leaders
to fulfil their potential through development opportunities
and provide us with a talent pipeline enabled to fill critical
roles across the Group. These workshops have resulted in the
development of 600+ high potential New Leaders across the
Group’s businesses who are given significantly elevated roles
and responsibilities.
Leadership and Talent Analytics
We have partnered with experts to evaluate our existing
talent management practices and implement best-in-class
new initiatives for talent development. We are focussing
on employing digital channels to run accelerated growth
drives, workshops, in-house learning modules and other
development opportunities.
360 Degree Feedback
At Vedanta we promote growth and nurturing of our internal
talent pool by encouraging internal dialogue between senior
leaders and their young mentees and peers. For this reason,
we have launched a 360 Degree Feedback for our ExCo
Leaders in collaboration with an external partner. We believe
that this will help to fast track assessment and development
of leaders and we aim to extend this to cover all our
professionals in due course.
PERFORMANCE MANAGEMENT
& TOTAL REWARDS
V-Perform: One Performance System for One Vedanta
At Vedanta, our focus is to constantly improve the level of
automation in all our operations. V-Perform is a pan-Vedanta
initiative to standardise the Performance Management System
(PMS) and process across all Vedanta Group companies by
leveraging technology. This enables functions, teams and
individuals to track performance on a regular basis, evaluate
efficiency through advanced analytics and implement
proactive decisions towards achieving Vedanta’s objectives.
We foster a culture of safety and sustainability to achieve our
ultimate vision of “Zero Harm”, “Zero Waste & “Zero Discharge”.
To enhance our safety performance in the workplace and
strengthen our existing Safety Management System, a safety
competency assessment process was completed mid-year by
all employees.
Employee Stock Option Scheme (‘ESOS’)
Employee stock options are a significant component of our
long-term incentives. They enable our employees to share
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in the success of the Company, encouraging high-growth
performance and reinforcing employee pride with a
focus on ownership.
Your Company has established a share incentive schemes
viz. ‘Vedanta Limited Employee Stock Option Scheme 2016’
(“the Scheme”). The Scheme was framed with a view to reward
employees for their contribution in successful operation of
the Company with wealth creation opportunities, encouraging
high-growth performance and reinforcing employee pride.
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 was launched after obtaining statutory approvals,
including shareholders’ approval by way of postal ballot
on December 12, 2016. In 2018, 35% of the workforce
participated in this Scheme with a focus on our young & senior
leaders, employees driving strategic projects and high impact
task force members.
The Scheme is currently administered through Vedanta
Limited ESOS Trust (ESOS Trust) which is authorised by the
shareholders to acquire the Company’s shares from secondary
market from time to time, for implementation of the Scheme.
During the year, the ESOS Trust was re-constituted by the
Nomination & Remuneration Committee in its meeting held on
July 13, 2018. The details of the trustees can be accessed at
www.vedantalimited.com.
No employee has been issued stock options during the year,
equal to or exceeding one percent of the issued capital of the
Company at the time of grant.
During the year, the acquisition by the trust does not exceeded
2% of the paid-up capital of the Company. Further, the total
acquisition by trust at no time exceeded 5% of the paid-up
equity capital of the Company.
During the year under review 14,055,556 options were
granted to 2,798 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, 2019 is available on the website of the
Company at www.vedantalimited.com.
The Company confirms that the Scheme complies with
the 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 Annual
General Meeting. A copy of the same will also be available for
inspection at the Company’s Registered Office.
162
EMPLOYEE INFORMATION AND RELATED DISCLOSURES /
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section
197 of the Companies Act, 2013 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.
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, eight complaints were received and resolved.
Four 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.
RISK MANAGEMENT
Your businesses are exposed to a variety of risks, which
are inherent to a global natural 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 organisation’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 forms
part of 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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS 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.
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.
The Risk Management Policy of the Company was revised
by the Board in its meeting held on March 28, 2019 on the
recommendation of the Risk Management Committee and
Audit Committee to include cyber security.
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.
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, focussing 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.
In addition, as part of their role, the Board and its Committees
routinely monitor the Group’s material business risks. Due to
the 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.
Since the Company has strong internal control systems which
are further strengthened by periodic reviews as required
under the 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 judgement 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 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.
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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 available on the
Company’s website at www.vedantalimited.com.
INVESTOR RELATIONS
Your Company has an active Investor Relations (IR) Programme
and continuously strives for excellence in its IR engagement
with international and domestic investors through various
mediums such as quarterly earnings calls, Investor & Analyst
Days, site visits, one-on-one and group meetings, participation
in sell-side conferences and non-deal Roadshows.
The promoters of the Company and the senior management
consisting of CEO and CFO involve themselves regularly in
investor and analyst interactions. Depending on the context
and need, the leadership team from businesses is also invited
for these engagements.
Vedanta has set standards through the detailed and
transparent disclosures on the Company’s operational and
financial performance. Your Company had created its first
Integrated Report (for Financial Year 2018). Your Company
initiated a new communication initiative which involves
sending a brief update about the Company’s performance and
events to its shareholders and other stakeholders regularly.
Having a diverse shareholder base and seven businesses
demands enormous efforts from an IR function to manage
investors and sell-side and to ensure that all business updates
are provided timely and in complete. The dissemination of
business updates through this “Investor Brief” has been well
appreciated. As a key milestone in this continuing endeavour,
your Company created a digital interactive microsite on the
corporate website to provide an interactive experience beyond
what is available in the annual and quarterly results materials.
Your Company benchmarks global IR standards and tries to be
at par with them. The investor and the analyst community have
appreciated your Company’s IR team and practices being one
of the best in the country. Your Company has been recognised
for its IR efforts year on year by globally renowned forums.
CORPORATE GOVERNANCE REPORT
Your board seeks to embed and sustain a culture that
will enable us to achieve our objectives through effective
corporate governance and enhance transparent engagement
with key stakeholders.
164
In our constant endeavour to benchmark our policies and
practices and in light of various developments in the realm of
corporate governance and regulatory reforms, your Company
continues to maintain and implement the highest standards
of corporate governance and ethical business practices
across the globe.
A separate report on Corporate Governance setting out the
governance structure, principal activities of the Board and its
Committees and the policies and practices that enable the
Board to fulfil its stewardship responsibilities together with
a Certificate from the Statutory Auditors of the Company
regarding compliance of conditions of Corporate Governance
as stipulated under Listing Regulations is provided as an
Annexure to the Annual report.
DIRECTORS & KEY MANAGERIAL PERSONNEL
We aim to bring a diverse and complementary range of
skills, knowledge and experience to the Board, so that we
are equipped to navigate the operational, social, regulatory
and geopolitical complexity in which our business operates.
Achieving the right blend of skills and diversity to support
effective decision-making is a continuing process.
The detailed composition of the Board and Key Managerial
Personnel (KMP) of the Company along with the changes
in the board and KMP during the period under review are
provided in the Corporate Governance Report.
DIRECTORS SEEKING RE-APPOINTMENT
Pursuant to the provision of Companies Act, 2013,
Ms. Priya Agarwal (DIN: 05162177), Non-Executive Director
of the Company, is liable to retire by rotation at the ensuing
Annual General Meeting (AGM) and being eligible, has offered
herself for re-appointment. Accordingly, the appointment of
Ms. Priya Agarwal is being placed for approval of the members
at the AGM. A brief profile of Ms. Priya and other related
information is provided in the AGM notice. The Board on the
recommendation of Nomination & Remuneration Committee
recommends her re-appointment at the AGM.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from all the
Independent Directors that they continue to meet the criteria
of independence as provided under the Companies Act and
Listing Regulations and comply with the Code for Independent
Directors as specified under Schedule IV of the Act.
The Directors have also confirmed that they are not aware
of any circumstance or situation, which exists or may be
reasonably anticipated, that could impair or impact their ability
to discharge their duties with an objective independent
judgement and without any external influence.
BOARD DIVERSITY & INCLUSION
Your Company believes that a diverse and inclusive Board is
essential for achieving long-term growth and development
of the Company. This ensures timely anticipation of risks and
opportunities. The Company has a diverse Board consisting of
Directors possessing variety of skills, expertise, qualifications
and experience. The details of the key qualifications, skills and
attributes are forming part the Corporate Governance Report.
POLICY ON DIRECTOR’S APPOINTMENT AND
REMUNERATION
The Company’s Nomination & Remuneration Policy sets out
the criteria for determining qualifications, positive attributes
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS and independence while evaluating a person for appointment/
re-appointment as Director or as KMP, with no discrimination
on the grounds of ethnicity, nationality, gender or race or any
other such factor.
The salient features of the Policy and the changes during the
year are provided in the Corporate Governance Report and
the policy is also available on the website of the Company at
www.vedantalimited.com
FAMILIARISATION PROGRAMME FOR BOARD MEMBERS
Your Company has a separately defined Familiarisation
Programme for its Directors which aims to provide insights
to the newly inducted Directors about the Company, its
operations, business, industry and environment and also to
update the Directors on a continual basis.
The details of training and familiarisation programme process
for Directors have been provided under the Corporate
Governance Report and is also available on the website of the
Company at www.vedantalimited.com
BOARD EVALUATION
Your Board is committed to transparency in assessing the
performance of Directors. The Company has put in place a
robust framework for evaluation of the Board, its Committees
the Chairman, and Individual Directors and the governance
processes that support the Board’s work.
The Company engaged the services of a leading HR
consultancy, to conduct the entire process of Board evaluation
and the same was facilitated through an online secured
module ensuring transparent, effective and independent
of involvement of the management. The evaluation was
conducted through questionnaires having qualitative
parameters and feedback based on ratings. Recommendations
arising from the evaluation process were considered by the
Board to optimise its effectiveness.
The outcome of the Board evaluation was discussed by the
Nomination & Remuneration Committee and the Board at the
meeting held on March 28, 2019.
A detailed update on the Board Evaluation is provided in the
Corporate Governance Report.
BOARD & COMMITTEE MEETINGS
The Board in conjunction with its Committees meets at regular intervals to ensure all decisions are taken timely. The Board met 10
times during the FY2019. The details of Board committees as on March 31, 2019 are provided below:
STATUTORY BOARD COMMITTEES
AUDIT COMMITTEE
CORPORATE SOCIAL
RESPONSIBILITY
COMMITTEE
NOMINATION &
REMUNERATION
COMMITTEE
STAKEHOLDERS
RELATIONSHIP
COMMITTEE
RISK MANAGEMENT
COMMITTEE
OTHER COMMITTEES
COMMITTEE OF
DIRECTORS
FINANCE STANDING
COMMITTEE
SHARE & DEBENTURE
TRANSFER COMMITTEE
Further, the Board of Directors at their
meeting held on January 31, 2019
have also constituted Sustainability
Committee w.e.f. April 1, 2019.
The details on Board, its committees,
their composition and terms and
reference and meetings held during
FY2019 and attendance is provided in
the Corporate Governance Report.
All the recommendations made
by each of the Committees were
accepted by the Board.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 165
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AUDITORS AND AUDITORS’ REPORT
STATUTORY AUDITORS
COST AUDITORS
SECRETARIAL AUDITOR
INTERNAL AUDITOR
• Your Company is required
to have the audit of its cost
records conducted by a
Cost Accountant in practice.
• The Board has appointed
M/s. Shome and Banerjee
as Cost Auditors for its Oil
& Gas Business and and
M/s. Ramnath Iyer & Co for
other business segments to
conduct cost audit for year
ended March 31, 2019.
• Further M/s. Ramnath Iyer
& Co. have been appointed
as the Lead Cost Auditors of
the Company.
• The said auditors have been
re appointed for FY2020 as
well.
• 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.
• The report of the Statutory
Auditor forming part of the
Annual Report , does not
contain any qualification,
reservation, adverse
remark or disclaimer.
The observations made
in the Auditors’ Report
are self-explanatory and
therefore do not call for any
further comments.
• M/s. S R Batliboi & Co.
LLP have confirmed
their independence
and eligibility under the
provisions of the Act &
Listing Regulations.
• The Company has appointed
• M/s. Deloitte Haskins &
Sells, LLP was appointed
as the Internal Auditors for
FY2019.
• The Group’s internal
audit activity is managed
through the Management
Assurance Services (‘MAS’)
function.
• The Board, on the
recommendation of
the Audit Committee
has re-appointed
M/s. Deloitte Haskins
& Sells, LLP as the Internal
Auditors for FY2020.
M/s. Chandrasekaran
& Associates, a firm of
Company Secretaries in
practice to undertake the
Secretarial Audit of the
Company for FY2019.
• The Report of the
Secretarial Audit in
Form MR-3 is annexed
herewith as Annexure D.
Further, the Annual Secretarial
Compliance Report is
available on the website at
www.vedantalimited.com.
• The Secretarial Audit Report
does not contain any
qualifications, reservation,
adverse remarks or
disclaimer.
• The Board has re-appointed
M/s. Chandrasekaran &
Associates as Secretarial
Auditors for FY2020.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, the Statutory Auditor, Cost
Auditors and Secretarial Auditor have not reported any
instances of frauds committed in the Company by its Officers
or Employees to the Audit Committee under Section 143(12)
of the Companies Act, 2013, details of which needs to be
mentioned in this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Regulation 34 of the Listing Regulations, a
detailed report on the Management Discussion and Analysis is
presented in a separate section in the Annual Report.
DETAILS OF LOANS/ GUARANTEES/ INVESTMENT MADE
BY THE COMPANY
The 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).
The Company has a policy on material subsidiaries and the
same may be accessed at www.vedantalimited.com.
DEBENTURES
During the financial year, your Company raised `5,000 crore through issuance of secured, rated, redeemable, non-cumulative,
non-convertible debentures of face value of `1,000,000 each on private placement basis as per the following details:
Coupon Rate
8.50% Secured Redeemable Non-Convertible
Debentures - Series I
8.50% Secured Redeemable Non-Convertible
Debentures - Series II
9.18% Secured Redeemable Non-Convertible
Debentures
Date of
Allotment
No. of NCDs
Total Amount
April 5, 2018
23,500
April 5, 2018
16,500
2,350
1,650
Tenor
3 years
Maturity Date
April 5, 2021
3 years 2 months
& 10 Days
June 15, 2021
July 4, 2018
10,000
1,000 2 years & 363 days
July 2, 2021
The aforesaid debentures are listed on BSE Limited.
166
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS FIXED DEPOSITS
As reported last year, the Company has discontinued the
renewal of its fixed deposits on maturity. As at March 31, 2019
deposits amounting to ` 54, 000 remains unclaimed. Since the
matter is sub judice, the Company is maintaining status quo.
TRANSFER TO RESERVES
The Company proposes Nil transfer to General Reserve out of
its total profit of `5,075 crore for the financial year.
CAPITAL STRUCTURE
The Authorised Share Capital of the Company is
` 74,12,01,00,000 divided into 44,020,100,000 number of
equity shares of ` 1/- each and 3,010,000,000 Preference
Shares of ` 10/- each.
During the year the Company redeemed 3,010,000,000
Preference Shares of ` 10/- each as per their terms of
issuance. The paid-up share capital of the Company was
reduced from ` 33,817,504,871 divided into 3,717,504,871
equity shares of face value of ` 1 each and 3,010,000,000
preference shares of face value of ` 10 each to 3,717,504,871
equity shares of ` 1 each.
The details of share capital as on March 31, 2019 is
provided below:-
Particulars
Authorised Share Capital
Paid up Capital
Listed Capital
Amount (`)
74,12,01,00,000
3,71,75,04,871
3,71,71,96,639
Shares under Abeyance pending allotment
3,08,232
*308,232 equity shares are pending for allotment and listing hence, are kept
under abeyance category since they are subjudice.
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. The details of shares lying in
the unclaimed suspense account are provided below:
Description
Aggregate number of shareholders and the outstanding shares in the suspense account lying at the
beginning of the year
Number of shares 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 `1 each
4,018
3,403,603
0
80
-
0
98,681
-
1,221
654,660
2,717
2,650,262
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In accordance with provision of Companies Act and IEPF Rules, the Company is required to transfer the following
amounts to IEPF:-
• Dividend amount that remains unpaid/unclaimed for a period of 7 years;
• Shares on which the dividend has not been paid/claimed for 7 consecutive years or more
Your Company in its various communications to the shareholders from time to time, request them to claim the unpaid/unclaimed
amount of dividend and shares due for transfer to the IEPF account established by Central Government. Further, in compliance
with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules) including statutory modifications thereof, the
Company publishes notice in newspapers and also sends specific letters to all the shareholders, whose shares are due to be
transferred to IEPF, to enable them claim their rightful dues.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 167
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Directors’ Report continued
The details of dividend transferred during the year is provided below:
Dividend transferred to IEPF during the year
Financial Year
2010-11
2010-11
2010-11
2010-11
2011-12
2011-12
Total
Type of Dividend
Dividend declared on
Amount transferred
to IEPF (in `)
Date of transfer to IEPF
Interim Dividend
March 12, 2011
1,23,51,835.00
May 9, 2018
Final Dividend
Final Dividend
Final Dividend
July 25, 2011
July 21, 2011
52,19,694.00
September 21, 2018
1,73,95,336.00
September 24, 2018
August 14, 2011
19,77,927.00
August 31, 2018
Interim Dividend
October 24, 2011
56,27,575.00
December 19, 2018
Interim Dividend
January 25, 2012
1,01,63,686.00
March 16, 2019
5,27, 36,053.00
Unpaid dividend on the shares on which there was a specific order of court/ tribunal/ statutory authority restraining transfer of
such shares and dividend thereon, were not transferred to IEPF pursuant to Section 124 of the Companies Act, 2013 and Rule 6
of IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 including statutory modifications or re-enactments thereof.
Dividend declared during the year transferred to IEPF
Financial Year
2018-19
Total
Type of Dividend
Dividend declared on
Amount transferred
to IEPF (in `)
Date of transfer to IEPF
1st Interim Dividend
October 31, 2018
3,99,58,228.00
November 22, 2018
2nd Interim Dividend March 6, 2019
43,48,395.40
March 18, 2019
44,306,623.40
Shares transferred/credited to IEPF
During the year, the Company transferred 1,346,250 equity shares of `1/- each comprising of 2,399 shareholders to IEPF.
The Company has also uploaded the details of unpaid and unclaimed amounts lying with the Company as on August 24, 2018
(date of last Annual General Meeting) on the Company’s website www.vedantalimited.com. Further, the details of equity shares
transferred are available on the Company’s website www.vedantalimited.com.
The shareholders whose shares/dividends have been transferred to IEPF can claim the same from IEPF in accordance with the
prescribed procedure and on submission of such documents as prescribed under the IEPF Rules. The process for claiming the
unpaid dividend/shares out of the IEPF can be accessed at www.iepf.gov.in.
The dates on which unclaimed dividend and their corresponding shares would become liable to be transferred to the IEPF during
the FY 2020 is provided below:
Dividend to be transferred to IEPF during FY 2020
Dividend
Final Dividend 2011-12
Final dividend 2011-12
Final Dividend 2011-12
Interim Dividend 2012-13 (1st)
Interim 2012-13
Interim Dividend 2012-13 (2nd)
Total
Date of Declaration
of Dividend
Due date for
transfer to IEPF
Amount
(As on March 31,
2019)
29-Jul-2012
28-Aug-19
18,12,052.50
24-Apr-2012
7-Sep-19
1,01,03,138.00
25-Apr-2012
18-Sep-19
59,70,651.00
23-Oct-2012
28-Dec-19
64,03,296.90
31-Oct-2012
5-Jan-20
30-Oct-2012
4-Jan-20
44,62,555.00
14,49,220.00
3,02,00,913.40
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE
COMPANIES
Your Company has 54 subsidiaries (15 direct and 39 indirect)
as at March 31, 2019, as disclosed in the notes to accounts.
During the year and till date the following changes have taken
place in subsidiary companies:
Subsidiary companies formed/acquired:
• Vedanta Star Limited acquired on April 23, 2018
• Electrosteel Steels Limited acquired on June 4, 2018
As at March 31, 2019, the Company has 5 associate
companies and joint ventures.
Associate Companies and Joint Ventures:
• RoshSkor Township (Pty) Limited
• Gaurav Overseas Private Limited
• Goa Maritime Private Limited
• Madanpur South Coal Company Limited
• Rampia Coal Mines and Energy Private Limited
168
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS As required under 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.
During the year, the Board of Directors have reviewed the
affairs of the subsidiaries. Pursuant to Section 129(3) of the
Companies Act 2013 (the Act), a statement containing the
salient features of the financial statement of the subsidiaries
and associate companies is attached to the financial
statement in Form AOC-1. The statement also provides
details of performance and financial position of each of
the subsidiaries.
In accordance with Section 136 of the Act, the audited
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 at www.vedantalimited.com. 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.
RELATED PARTY TRANSACTIONS
Your Company has in place a Policy on Related Party
Transaction (RPT) (RPT Policy) formulated in line with the
provision of the Companies Act and Listing Regulations.
The Policy may be accessed at www.vedantalimited.com.
The Policy sets out the philosophy and processes to be
followed for approval and review of transactions with Related
Party and intends to ensure that proper reporting, approval
and disclosure processes are in place for all transactions with
Related Parties.
A detailed landscape of all RPTs to the Audit Committee,
specifying the nature, value, and terms and conditions
of the transaction is presented to the Audit Committee.
Also, a Related Party Transactions Manual-Standard Operating
Procedures has been formulated to identify and monitor all
such transactions.
During the fiscal 2019, all the contracts/ arrangements/
transactions entered into by the Company with the related
parties were in the ordinary course of business and on an arm’s
length basis and were in compliance with the provisions of the
Companies Act and Listing Regulations.
Further, there have been no materially significant RPTs during
the year pursuant to the provisions of the Companies Act
and Listing Regulations. Accordingly, the disclosure required
u/s 134(3)(h) of the Act in Form AOC-2 is not applicable
to your Company.
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.
Iron-Ore Division – Goa Operations
Supreme Court (SC) in the Goa Mining matter in 2014
declared that the deemed mining leases of the lessees in Goa
expired on November 22, 1987 and the maximum of 20 years
renewal period of the deemed mining leases in Goa under
the MMDR Act had also expired on November 22, 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 judgement of the SC in the earlier Goa
mining matter. The Supreme Court passed the judgement
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.
Some mining lessees and other mining stakeholder have
filed applications in the pending Abolition Act matter for
resumption of mining in the State. The Central Government
has also filed an early hearing application in the long pending
abolition matter.
Copper Division
Copper division of Vedanta Limited has received an order from
Tamil Nadu Pollution Control Board (TNPCB) on April 9, 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 Government
of Tamil Nadu on May 28, 2018 ordered the permanent
closure of the plant. The Company challenged the same in
the National Green Tribunal which passed a favourable order
for reopening of the plant. The order was appealed by the
TNPCB and the State of Tamil Nadu in the Supreme Court.
The Supreme Court passed an order upholding the appeal and
directing the Company to approach the Madras High Court for
relief. The Company has filed a writ petition in the Madras High
Court that is currently pending adjudication.
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, the High Court ordered
us to cease construction and all other activities on site for
the proposed expansion project with immediate effect.
Separately, SIPCOT through its letter dated May 29, 2018,
cancelled 342.22 acres of the land allotted to us for the
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 169
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Directors’ Report continued
proposed expansion project. The Company challenged the
same in the High Court which passed an interim stay on the
withdrawal of land allotment.
SECRETARIAL STANDARDS
The Company has complied with the applicable provisions of
the Secretarial Standards issued by the Institute of Companies
Secretaries of India.
ANNUAL RETURN
An extract of the Annual Return in prescribed form MGT-9 is
annexed hereto as ‘Annexure C’ to the Directors’ Report.
BUSINESS RESPONSIBILITY REPORT &
SUSTAINABILITY REPORT
The safety of our
workforce
Environmental
management
Retaining our social
licence to operate
Diversity of workforce and
equal opportunities
In pursuance of our commitment to responsible business
and in compliance with Listing Regulations, a Business
Responsibility Report (“BRR”) which describes the initiatives
taken by the Company from an environmental, social and
governance perspective forms part of this Annual Report.
Our strategy continues to focus on delivering long-term value
and growth to our shareholders through diversified portfolio of
large, long life and low-cost assets. At Vedanta, we understand
the value of a unified sustainable development agenda that
goes beyond compliance.
We manage our business in a sustainable manner, ensuring
we have effective and appropriate business processes
and behaviours in place, focussing on health and safety
management and responsibly managing our environmental
impacts and preserving biodiversity. We aim to create a culture
based on our values which ensures the professional growth
and personal well-being of our entire workforce.
170
Your Company also publishes the Sustainability Report
annually which is based on Global Reporting Initiatives (GRI)
Standards. The Sustainability report is available on the website
of the Company at www.vedantalimited.com
AWARDS AND ACCOLADES
Your Company has been winning accolades for its unique
innovations and contributions to the stakeholders & society.
Such recognitions are a testimony to the growth, emphasis
on being a safe operator and commitment towards delivering
value to our people, investors and stakeholders.
During the year, we won multiple awards and recognition.
The details of the same are provided in separate section in
the Annual Report.
MATERIAL CHANGES & COMMITMENT AFFECTING THE
FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the
financial position of the Company subsequent to the close of
the financial year 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 E’.
The details of the Foreign Exchange Earnings and Outgo
are as follows:
Description
Expenditure in foreign currency
Earnings in foreign currency
CIF Value of Imports
(` in crore)
Year Ended
March 31, 2019
Year Ended
March 31, 2018
3,459
18,596
18,633
1,551
28,394
28,900
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors hereby confirms that:-
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and there is no
material departures from the same;
(b) they have selected such accounting policies and applied
them consistently and made judgements 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. March 31, 2019 and of the profit
and loss of the Company for that period;
(c) they 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) the annual accounts have been prepared on a going
concern basis;
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS (e) they 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) proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems were adequate and operating effectively.
ACKNOWLEDGEMENT
Your Board takes this opportunity to convey their sincere
appreciation to all employees for their dedicated services, firm
commitment and collective contribution to the goals, mission
and vision of the Company.
We would also like to express our sincere gratitude to all our
stakeholders for their endless faith in their Company.
The Directors further take this opportunity to acknowledge the
support and assistance extended to us by the Government,
Bankers, Stock Exchanges, Financial Institutions and
Communities, Shareholders and Investors.
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.
We look forward to delivering another year of value
adding growth.
For and on behalf of the Board of Directors
Place: Mumbai
Dated: May 7, 2019
Navin Agarwal
Executive Chairman
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 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 firmly believes in the coexistence of
business and communities and is committed to the
development of an eco-system of prosperity in the society
around operations.
As a responsible corporate citizen, we believe that our
neighbourhood communities are our primary stakeholders
and we seek to build mutually supportive relationships
with them. 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 organisations, corporates, civil societies &
community-based organisations to implement 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 and national priorities, including
Sustainable Development goals. There are ten broad
thematic areas under which the Company undertakes its
community development projects. The Nandghar Project
is among the Company’s flagship national initiatives,
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.
More on Vedanta’s CSR policy may be seen at
www.vedantalimited.com
2. The composition of the CSR Committee:
The Company’s Corporate Social Responsibility (CSR)
Committee comprises of seven (7) members including four
(4) Independent Directors, two (2) Whole-Time Directors
and one (1) Non-Executive Director as per below details:-
Name
Mr. Ravi Kant
Designation
Chairman,
Independent Director
Mr. K. Venkataramanan
Independent Director
Mr. Aman Mehta
Mr. U. K. Sinha
Mr. Tarun Jain
Independent Director
Independent Director
Whole-Time Director
Mr. Srinivasan Venkatakrishnan Whole-Time Director & CEO
Ms. Priya Agarwal
Non-Executive Director
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 ` 659 crores.
172
4.
Prescribed CSR Expenditure (2% of the amount shown
as in item 3 above):
Base on the average net profit of the Company for the last
three financial years, the Company is required to spend
` 13 crores on its CSR activities. The Company as a good
corporate citizen has spent ` 51.72 crores in FY 2019 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 ` 51.72 crores in the year
FY 2019 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 in the required format.
On a consolidated basis, the detailed CSR spent for
FY 2019 is provided below:
(` Crores)
For the year ended
March 31, 2019
Vedanta Limited (Standalone) (A)
Vedanta Subsidiaries (India) (B)
Talwandi Sabo Power Limited (TSPL)
Hindustan Zinc Limited (HZL)
Bharat Aluminium Company Limited (BALCO)
BALCO Hospital
Sesa Resources Limited (SRL)
Sesa Mining Corporation Limited (SMCL)
Electrosteel Steels Limited (ESL)
Total (B)
Vedanta Subsidiaries (Global) (C)
Zinc International
(Skorpion Zinc (SZ) & Black Mountain Mining
Proprietary Limited (BMM ))
Total (C)
Total CSR Spent
51.72
0.51
130.2
5.43
99.8
6.88
0.05
0.52
243.39
14.13
14.13
309.24
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 and Independent Director
(Chairman of CSR Committee)
DIN: 00016184
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Sector in which
the project is
covered
Children’s
Well-being &
education
Health Care
Cairn - Oil & Gas
Project or Programme
Amount Spent*
Area
Rajasthan
Name of
District
Barmer
Amount
Outlay*
21.47
Direct Overheads
5
-
Cumulative
Spend till
reporting
period
Amount Spent,
Direct or implementing
agency
5 Cairn Foundation
Rajasthan Barmer
2
2.15
-
2.15 Barmer Jan Sewa
Samiti
CSR Project or
Activity Identified
Sl.
No.
1 Nandghar (Contribution to
Vedanta Foundation)
2
Support in district Hospital
Barmer -specialist doctors
and cleaning staffs
3 Health and nutrition
entitlements Project
Health Care
Gujarat
4 Mobile Health Van Project Health Care
Rajasthan &
Gujarat
5
Expenses towards O&M of
Nandghar
Others
Rajasthan
Rajkot, Viramgam
& Morbi
Barmer in
Rajasthan
Radhanpur &
Dwarka in Gujarat
Barmer
6 Micro CSR activities
Others
Rajasthan &
Gujarat
Suvali, Barmer
7
8
9
Project Divyang - Support to
3 paralympics
Project Tamana (Skill training
of differently abled children)
Skill Training and infra
revamp of Cairn Centre of
Excellence, Jodhpur
Sports &
Culture
Skills
Rajasthan
Rajasthan
Delhi NCR
Delhi
Skills
Rajasthan
Jodhpur
0.12
2.71
0.62
0.24
0.33
0.26
3.05
0.06
-
0.06 Chetna
2.1
-
2.1 Wockhardt
0.62
-
Foundation, Dhara
Sansthan and
Helpage India
0.62 KPMG & Adfactors
0.18
-
0.18 CEDRA, Dhara
Sansthan and Barmer
Jan Sewa Samiti
0.25
-
0.25 Paralympic
Committee of India
0.12
-
0.12 Tamana
2.46
-
2.46 Nettur Technical
Training Foundation,
Alethe Consulting,
Howell, Mohangarh
Engineers
10 Barmer Smart City Project Community
Rajasthan
Barmer
0.55
0.63
-
0.63 Anil Construction &
11 Compliance and statutory
advisory for Cairn
Foundation
12 Commissioning/
maintenance/ O&M of
Rawatsar Solar Plant
13 Barmer Unnati Project &
support to Mujhyamantri Jal
Swawlamban Yojna
14 Sustaining dairy
development
15 Skill Training and infra
revamp in Cairn Enterprise
Centre, Barmer
16 Providing improved
Development
(Infrastructure)
Others
Community
Development
(Infrastructure)
Agriculture
& Animal
Husbandry
Agriculture
& Animal
Husbandry
Skills
Drinking Water
& Sanitation
sanitation in Baitu Block - HH
toilets project By RDO
17 Safe Drinking Water Project
by Fontus Water
by Waterlife India
18 School sanitation initiative
by Yuva Unstoppable
19 Safe Drinking Water Project
Drinking Water
& Sanitation
Drinking Water
& Sanitation
Drinking Water
& Sanitation
Drinking Water
& Sanitation
Environment,
Restoration &
protection
22 Sholarship in CEC, Barmer Children’s
21 Distribution of recyclable
20 Solar Power Back Up for
bags in the community
Kawas RO Plant
Delhi NCR
Delhi
0.11
0.1
-
0.1 KPMG
Laxman construction
Rajasthan
Barmer
0.09
-
-
- Sun Shakthi Solar
System
Rajasthan
Barmer
2.22
2.3
-
2.3 NABARD, BAIF and
Watershed Dept.
(GoR)
Rajasthan
Barmer
0.38
0.25
-
0.25 Society for Upliftment
Rajasthan
Barmer
2.55
1.9
-
of Rural Economy
1.9 SEEDS and Pawan
Construction
Rajasthan
Barmer
1.05
1.04
-
1.04 RDO Trust
Rajasthan
Barmer
2
2.17
-
2.17 Waterlife
Rajasthan
Barmer
Rajasthan
Barmer
0.55
1.69
0.54
-
0.54 Yuva Unstoppable
0.58
-
0.58 Fontus Water
Rajasthan
Barmer
0.2
0.17
-
0.17 Ultrathon Electric
Rajasthan Barmer
0.09
0.09 -
0.09 Viba Press
Rajasthan Barmer
0.12
0.09 -
0.09 Cairn Foundation
23 Functionalisation of FRUs
in Barmer by IPE GLOBAL
24 Shifting of Old plants by
Swajal
Well-being &
education
Health Care
Rajasthan Barmer
Drinking Water
& Sanitation
Rajasthan
Barmer
0.6
0.5
0.64 -
0.64 IPE Global
0.18
-
0.18 Swajal
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 173
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure A continued
CSR Project or
Activity Identified
Sl.
No.
25 Showcasing CSR initiatives
at different state & national
forums
1. CSR Stall in Rajasthan
Heritage Week
2. CSR Stall in Cairn Pink
City half Marathon
26 Study on salinity of
groundwater and water
supply & distribution
27 Contribution to District
Administration
28 Support to PHC -S’Yanam,
Ravva (AP)| District Medical
Dept.
29 Support to Rajasthan
Heritage Week 2018
30 Support to Cairn’s Pink City
Sports Fest
31 Appointment of consultants
for administrative works and
audits & compliances
32 Support to Gaja Cyclone
relief work in Tamil Nadu
Cairn - Oil & Gas
Project or Programme
Amount Spent*
Sector in which
the project is
covered
Name of
District
Area
Amount
Outlay*
Direct Overheads
Cumulative
Spend till
reporting
period
Amount Spent,
Direct or implementing
agency
Others
Corporate –
Rajasthan,
Gujarat
Jaipur
0.41
0.12
-
0.12 Wizcraft & Red Apple
Drinking Water
& Sanitation
Community
Development
(Infrastructure)
Health Care
Sports &
Culture
Sports &
Culture
Others
Rajasthan
Barmer
0.65
0.53
-
0.53 Nordic Technology,
East Godavari
2
2
-
2 Direct
Bank Geoscience
Limited
East Godavari
0.07
0.06
-
0.06 Direct
Andhra
Pradesh
Andhra
Pradesh
Rajasthan
Jaipur
Rajasthan
Jaipur
1.18
0.28
1.18
-
1.18 Prasad Bidapa
0.28
-
0.28 GT health Care
Rajasthan Barmer, Delhi NCR
0.56
-
0.55
0.55 Subhash Mittal
& Nyati Mundra,
Nimbus
0.31
0.36
0.3
-
0.3 Direct
-
0.35
0.35 Goodera
Health Care
Tamil Nadu
-
-
Rajasthan,
Gujarat and
Andhra
Pradesh
33 Support to Group CSR
Others
Initiatives – Goodera
Application, baseline
study, development of MIS
framework
34 Green Belt Development
around Corporate office and
appointment of consultant
for Green City
Environment,
Restoration &
protection
35 Support for promotion of
sports – AIP Wrestling
36 Nanhe Kadam & Aarogya
Sports &
Culture
Health Care
Project Services
37 Sujalam Sufalam with
Government of Gujarat by
Sama Charitable Trust
38 Others misc. activities
Drinking Water
& Sanitation
Others
CSR Project or
Activity Identified
Sl.
No.
39 Eradicating malnutrition
through Mid Day Meal
programme*
Sector in which
the project is
covered
Education
40 Promoting eductation
Education
thourgh Khushi Child Care
Centre
41 Pre Matric Tutorial Support-
Education
Shiksha Sambal
42 Support to schools
Education
43 Scholarship
Education
44 Value Based Education*
Education
45 Promoting preventive health
through Vedanta Hospital,
Ambulance and MHU
Health
46 Maa Santoshi Jankalyan
Health
Hospital, Bankakundru
174
Area
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Haryana
Gurgaon
0.27
0.23
-
0.23 Nimbus
Rajasthan
Jaipur
Gujarat
Viramgam
Gujarat
Viramgam
-
Rajasthan
and Delhi
NCR
0.14
0.06
0.02
0.14
-
0.14 Cairn Foundation
0.06
-
0.06 CEDRA
0.01
-
0.01 Sama Charitable
Trust
0.2
0.24
-
0.24 Others
Vednata Limited - Lanjigarh
Project or Programme
Amount Spent*
Name of
District
Kalahandi District
Amount
Outlay*
3
Direct Overheads
0.02 -
Cumulative
Spend till
Amount Spent,
reporting
Direct or implementing
period
agency
0.02 Manna Trust
Kalahandi District
0.5
0.41 -
0.41 FIDR
Kalahandi &
Rayagada District
Kalahandi District
Kalahandi District
Kalahandi District
Kalahandi &
Rayagada District
0.25
0.19 -
0.19 FIDR
0.2
0.2
0.5
0.12 -
0.12 Direct
0 -
0 Direct
0 -
0 Magic Bus
4
3.24
-
3.24 PVO
Kalahandi District
0.15
0.14 -
0.14 MSJK
Sub-Total
50
28.77
0.90
29.67
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Vednata Limited - Lanjigarh
Project or Programme
Amount Spent*
Amount
Outlay*
0.15
Direct Overheads
0.08 -
Cumulative
Spend till
reporting
period
0.08 Direct
Amount Spent,
Direct or implementing
agency
Name of
District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
1
0 -
0 NA
0.2
0 -
0.00 Direct
Kalahandi District
0.7
0.54 -
0.54 FFCT
Kalahandi District
0.23
0.16 -
0.16 Sightsavers India
Kalahandi &
Rayagada District
0.5
0.22 -
0.22 Mahashakti
Foundation
Kalahandi District
0.3
0.01 -
0.01 Direct
CSR Project or
Activity Identified
Sl.
No.
47 Providing Safe Drinking
Water
Sector in which
the project is
covered
Health
48 Malaria Control
programme*
Health
49 Support For Health Issues Health
50 Open Defecation Free
Health
51 Vedanta Baljyoti School Eye
Health
Health programme
Women
Empowerment
Livelihood
52 Sakhi (Women SHG
Promotion, Stregthening
and IGA inclusion)
53 Promotion sustainable
Agriculture practices – SRI,
Sunflower, farmers Club,
Farm activity*
54 Promoting Animal
Husbandary project
– Poultry & Goatery,
Pisciculture
Area
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Lanjigarh &
Junagarh
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Livelihood
Lanjigarh
Block
Kalahandi District
0.45 -
-
0 NA
55 Solar Based Irrigation
Livelihood
56 Tribal Art
57 Dhokra Art
Livelihood
Livelihood
58 Skill Development*
Livelihood
59 Rehabilitation Colony (NVN)
R&R
Maintenance
60 Need based infrastructre
development projects
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Kalahandi District
0.3
0 -
0 NA
Kalahandi District
0.16
0.05 -
0.05 FIDR
Kalahandi District
Kalahandi District
Kalahandi District
Kalahandi &
Rayagada District
0.2
0.1
0.5
0.13 -
0.13 Mahashakti
Foundation
0 -
0 NA
0 -
0.00 Direct
5.69
1.59 -
1.59 Direct
Infrastructure Lanjigarh &
Muniguda
Block
61 Nandghar
Infrastructure Lanjigarh
Kalahandi District
0.05 -
-
0 VF
62 Promotion of Sports &
Culture
63 Financial Inclusions*
64 Meeting
65 Exposure Visits
Stakeholder
Engagement
Stakeholder
Engagement
Stakeholder
Engagement
Stakeholder
Engagement
66 Branding (Printing Banner
Wall Painting etc.)
Stakeholder
Engagement
67 Employee Engagement
68 Organising Events
69 Magazine
70 Baseline survey
71 Impact assessment/
studies/ audits
72 Award fees
73 Tour & Travel
Stakeholder
Engagement
Stakeholder
Engagement
Project
Management
Project
Management
Project
Management
Project
Management
Project
Management
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
Kalahandi &
Rayagada District
0.42
0.1 -
0.10 Direct
0.05 -
-
0 NA
0.1
0.06
-
0.06 Direct
0.06
0 -
0.00 Direct
0.05
-
0.02
0.02 Direct
0.02 -
-
0 Direct
0.1
0.19 -
0.19 Direct
Kalahandi District
0.2
0.02
-
0.02 Direct
Kalahandi District
0.15
Kalahandi District
Kalahandi District
Kalahandi District
0.3
0.1
0.2
-
-
-
-
0.09
0.20
0.04
0.09 TARU / FIDR
0.20 TARU/ FIDR
0.04 Direct
(0.01)
(0.01) Direct
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 175
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure A continued
Vednata Limited - Lanjigarh
Project or Programme
Amount Spent*
Sector in which
the project is
covered
Project
Management
Project
Management
Admin
Area
Lanjigarh
Block
Lanjigarh
Block
Lanjigarh
Block
CSR Project or
Sl.
No.
Activity Identified
74 Village Coordinator
75 Revolving Fund*
76 Salary
77 Provision
Wrong entries
78 Unbudgeted
Sub-Total
Name of
District
Kalahandi District
Amount
Outlay*
0.2
Direct Overheads
0.09
-
Cumulative
Spend till
reporting
period
0.09 Direct
Amount Spent,
Direct or implementing
agency
Kalahandi District
0.02 -
-
0 Direct
Kalahandi District
1.5
-
22.8
-
1.55
1.55 Direct
0.12 -
(0.02)
0.46
7.81
1.97
0.12
(0.02)
0.46
9.79
Iron Ore Business
Project or Programme
Amount Spent*
Amona & Navelim
Area
Name of
District
North Goa
Amount
Outlay*
0.381
Direct Overheads
0
0.2068
Cumulative
Spend till
reporting
period
Amount Spent,
Direct or implementing
agency
0.2068 Directly
Chitradurga
North Goa,
Chitradurga
Megalahalli,
Bommavvanagthihalli,
Kadaleguddu,
Bheemasamuda,
Hirekandavadi,
D.Medikeripura
Chikkenahalli.
Amona, Navelim
Megalahalli,
Bommavvanagthihalli,
Konanuru,
Sirigere, Haliyuru,
Palikehalli, Hire
Kandavadi, Tanigehalli,
Nallikatte, Alagatta,
V Palya, Siddapura,
Bhhemasamudra, B
Durga , Bommenahalli,
Kadaleguddu
Megalahalli,
Bommavvanagthihalli,
Navelim, Kagalagere,
Ganjigatte,
Muttugaduru,
Sirigere, Medikeripura,
Hosa Rangapura,
Chikkenahalli,
Palikehalli, Hale
Rangapura.
Malappanahatti,
Siddapura Jalikatte,
Cholaghatta.
Dharwad, Manoharpur Dharwad, West
Chitradurga &
North Goa
Singhbum
North Goa,
Chitradurga, West
Singhbum
Amona, Navelim,
Megalahalli,
Kagalagere,
Bommenahalli,
Chikkenahalli,
Malappanahatti,
Konanuru, B.N
Halli,Kadaleguddu,
Medikeripura,
Siddapura, Tanigehalli,
Muttugaduru.
0.04
0.0473
0
0.0473 Implementing agency
MYRADA, Chitradurga
1.201
0.9806
0
0.9806 Directly
0.3792
0.0544
0
0.0544 Direct as well as
through Vedanta
Foundation
1.8
0.7644
0.83
0.5313
0
0
0.7644 Directly
0.5313 Implementing
agency MYRADA
in Chitradurga &
Voluntary Health
Association of Goa
in Goa & SevaMob in
Manoharpur
CSR Project or
Activity Identified
Sl.
No.
79 Agriculture
rejuvenation and
dairy farming
project
80 Evening study
center
Sector in which
the project is
covered
Sustainable
livelihood
(livelihood
enhancement
projects)
Children's
Well-being &
Education
81 Support to
Educational
institutions &
Scholarship
Children's
Well-being &
Education
82 Skill development
for youths Vedanta
Computer Literacy
programme
Livelihood
Non-Farm
83 Anganwadi
Renovation
programme
84 Community
Children's
Well-being &
Education
Health
Medical Centres
(CMC), Mobile
Health Vans
176
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Iron Ore Business
Project or Programme
Amount Spent*
Name of
District
North Goa,
Chitradurga
Amount
Outlay*
0.129
Direct Overheads
0
0.0066
Cumulative
Spend till
reporting
period
Amount Spent,
Direct or implementing
agency
0.0066 Directly
North Goa,
Chitradurga, West
Singhbum
0.9867
0.3598
0
0.3598 Directly
North Goa,
Chitradurga,
0.46
0.1719
0
0.1719 Directly
North Goa,
Chitradurga,
0.186
0.0538
0
0.0538 Direct as well
as through
implementing agency
MYRADA
North Goa,
Chitradurga, West
Singhbum
0.085
0.0339
0
0.0339 Directly
CSR Project or
Sl.
No.
Activity Identified
85 Health campaigns
& Awareness
sessions
Sector in which
the project is
covered
Health
86 Drinking water
projects
Health
(Drinking
water)
87 Sanitation units
Health
(Sanitation)
88 Women SHG
formation &
training
Empowering
Women
89 Sports & cultural
activities at local
level
Promotion
of sport and
culture activity
Area
Amona, Navelim,
Meghanhalli,
Kadaleguddu,
Bommenahalli,
Sirigere, Avinahatti,
Bheemasamudra.
Amona, Navelim,
Meghanhalli, Sonshi,
Manoharpur Nallikatte,
Malali, Tanigehalli,
Sasalu, Hosahalli,
Bheemasamudra,
Bettada Nagenahalli,
Hulluru, Hulluru
Nayakarahatti,
Chikka Gutanuru,
Bommenahalli,
Hunasekatte ,
Hireguntanuru,
Konanuru, Haliyuru,
Palya, Medikeripura,
Malappanahatti
,Kodagavalli,
Chikkenahalli, B N
Halli, Kagalagere,
Basavapura,
Kadaleguddu.
Amona, Navelim,
Megalahalli
Bheemasamudra
Kadaleguddu
Kagalgere V.
Palya, Kagalgere
Gollarahatti,
Kagalgere
Megalahahatti,
Muttugudooru,
Palikehalli,
Kurubarhalli,
Bommenahalli.
Amona, Navelim,
Meghanhalli,Sirigere,
Chikkenahalli,
Konanuru,
Bommenahalli,
Kadaleguddu,
Bheemasamudra,
Medikeripura,
Muttugaduru.
Amona, Navelim,
Meghanhalli,
Manoharpura
Bommenahalli, Hire
Guntanuru.
90 Environment
Protection and
Restoration
91 Community
Development
(Infrastructure)
& Community
Mobilisation
Environment Amona, Navelim
North Goa
0.035
0.001
Need based
0.73
0.1174
0
0
0.001 Directly
0.1174 Directly
Kadaleguddu,
Bheemasamudra.
Amona, Navelim,
Meghanhalli,
Manoharpura
Hire Guntanuru,
Bheemasamudra,
Chikkenahalli,
Bommenahalli
Across operational
areas in Goa &
Chitradurga
North Goa,
Chitradurga,
Manoharpur
North Goa,
South Goa &
Chitradurga
92 CSR Audit & CSR
impact assessment
Programme &
Admin
0.25
0
0.0461
0.0461 Directly
Sub-Total
7.49
3.33
0.05
3.38
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 177
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure A continued
Vedanta Limited - Jharsuguda
Project or Programme
Amount Spent*
CSR Project or
Activity Identified
Sl.
No.
93 MHU
Sector in which
the project is
covered
Area
Name of
District
Jharsuguda
Jharsuguda
Amount
Outlay*
0.40
Direct Overheads
0.6214
Jharsuguda
Jharsuguda
0.08
0.0001
Jharsuguda
Jharsuguda
1.05
1.0442
Health, Water
& Sanitation
Jharsuguda
Jharsuguda
0.34
0.2574
-
0.26 Direct through
Jharsuguda
Jharsuguda
0.02
Rehabilitation
of People with
Disabilities
Jharsuguda
Jharsuguda
0.10
0
0
99 Vedanta DAV Scholarship
Jharsuguda
Jharsuguda
0.55
0.498
Jharsuguda
Jharsuguda
0.15
0.1858
Jharsuguda
Jharsuguda
0.22
0.07
-
0.07 NGO partner - New
Jharsuguda
Jharsuguda
0.25
0.0695
-
0.07 Subhalaxmi Co-op.
and NGO partners
Jharsuguda
Jharsuguda
0.20
0.1265
104 Supporting Sports &
Culture events
Sports, Culture
& Social Events
Jharsuguda
Jharsuguda
0.13
0.0202
105 Plantation & Maintenance Bio Investment Jharsuguda
Jharsuguda
0.21
0.229
Jharsuguda
Jharsuguda
0.54
0.2082
Cumulative
Spend till
Amount Spent,
reporting
Direct or implementing
period
agency
0.62 Wockhardt
Foundation/ Dist.
Health Dept.
0.00 NHM/ Health
Institution
1.04 Direct through
Community Member/
Municipality/
Contractor
-
-
-
-
-
-
-
Contractor &
Community Member
- NHM/ Health
Institution/
Community member
- National repute
Organisation
0.50 DAV institution
0.19 AJKA/Government
Education
Department,
Village Education
Department
-
-
-
-
0.13 SEWA, NABARD,
Agriculture Dept,
Horticulture Dept.
0.02 Direct through
Community Member
0.23 Pvt. Organistion/
Govt.
0.21 Direct through
Contractor
94 Project Jagruti:
Prevention of HIV / AIDS
95 Drinking water &
Sanitation initiatives:
Tubewell repairing,water
tanker, pond renovation
and other facilities for
drinking water
96 Village cleaning -
Sunarimunda, Nursery
& Gandhi Chowk & Biju
Chowk, Pitapali
97 Health & Awareness
Camp: Eye camps,
Malaria, dengue,
Diarrhoea and other
prevalent disease
98 Rehabilitation of People
with Disabilities
programme
100 Other Educational
Initiatives: VVVY Project/
Computer Class/ Tutorial
Classes/ Bridge school/
Competitive exam
preparation classes
101 Promoting Smart Classes
& Mini-Science lab in 5
Odiya medium school
– Next Education/STEM
Learning
102 Women Empowerment:
Subhalaxmi Co-op,
Capacity Buidling, Micro
Enterprises
103 Farm Activity: Project
Jeevika Samridhhi & other
initiative
Quality
Education
Sustainable
Livelihood &
Promotion of
agriculture
106 Initiative at R & R Colony:
O & M, Health, Water,
Education, Sanitation,
Infra, Sports & Culture
107 Basic and Social
Infrastruture Projects
108 Programme Coordination
exp, Study, MIS, Group
Initiatives – Concurrent
Audit, Village Coordinator,
Tour & Travel, EVP etc.
109 Strategic Infra initiative
around periphery villages
Development
Initiatives in
Resettlement &
Rehabilitation
Colony
Nandghar,
Community
Infrastructure
& RPDAC
Compliance
Admin
Expenses:
Other
programme
coordination
expenses need
assessment
and impact
assessment
study
Strategic
infra support
around
periphery
villages
178
Jharsuguda
Jharsuguda
0.50
0.1533
-
0.15 Direct through
Contractor &
Community Member
Jharsuguda
Jharsuguda
0.39
1.3691
-
1.37 NA
Jharsuguda
Jharsuguda
6.94
1.2414
-
1.24 Direct through
Contractor
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS CSR Project or
Sl.
No.
Activity Identified
110 Non-CSR Expenses
(Cultural Initiatives)
111 Reversal amount (Exp.
Other than Section 135)
Sub-Total
Sector in which
the project is
covered
Non CSR
Expenses
Reversal
Amount
Vedanta Limited - Jharsuguda
Project or Programme
Amount Spent*
Area
Name of
District
Jharsuguda
Jharsuguda
Amount
Outlay*
-
Direct Overheads
(0.0017)
-
Cumulative
Spend till
reporting
period
(0.0017)
Amount Spent,
Direct or implementing
agency
-
(0.2774)
-
(0.2774)
12.07
5.82
-
5.82
Sterlite Copper
Project or Programme
Amount Spent*
Sector in which
the project is
covered
Name of
District
Area
Amount
Outlay*
Direct Overheads
Cumulative
Spend till
reporting
period
Amount Spent,
Direct or implementing
agency
Education
Thoothukudi
Thoothukudi
-
0.05
-
0.05 Vedanta Foundation
Sl.
No.
CSR Project or
Activity Identified
112 Promoting education and
eradicating malnutrition
through Khushi Child
Care Center
113 Promoting girl child
Education
Thoothukudi
Thoothukudi
1.5
0.23
-
education
0.23 Humana People to
People India
114 Support to schools
Education
Thoothukudi
Thoothukudi
0.12
-
-
- Direct
115 Scholarship
Education
Thoothukudi
Thoothukudi
116 Mobile health care
Health
Thoothukudi
Thoothukudi
117 Providing Safe Drinking
Health
Thoothukudi
Thoothukudi
Water
0.35
1.82
0.8
1.85
-
1.85 Direct
0.17
-
0.17 Direct
0.18
-
0.18 Sri Sudalai
enterprises
118 Vision to all (eye test for
Health
Thoothukudi
Thoothukudi
0.04
-
-
- Aravind eye hospital
students)
119 Sakhi (Women SHG
Promotion, Stregthening
and IGA inclusion)
Women
Empowerment
Thoothukudi
Thoothukudi
1.19
0.22
-
0.22 Bell education
and women
empowerment
society/ Thulasi social
Trust/ Dhaayagam
welfare society
120 Promotion sustainable
Agriculture practices –
SRI, Sunflower, farmers
Club, Farm activity*
Livelihood
Thoothukudi
Thoothukudi
0.5
0.02
-
0.02 Direct
121 Promoting Animal
Livelihood
Thoothukudi
Thoothukudi
1.17
0.02
-
0.02 Direct
Husbandary project
– Poultry & Goatry,
Pisciculture
122 Skill Development*
Livelihood
Thoothukudi
Thoothukudi
1
0.2
-
0.2 IL&FS
123 Need based infrastructre
Infrastructure
Thoothukudi
Thoothukudi
2.65
-
-
- Direct
development projects
124 Nandghar
Infrastructure
Thoothukudi
Thoothuudi
0.5
-
-
- Direct
125 Promotion of Sports &
Culture
126 Meeting
127 Branding (Printing Banner
Wall Painting etc.)
128 Organising Events
129 Baseline survey
130 Impact assessment/
studies/ audits
131 Village Coordinator
Stakeholder
Engagement
Stakeholder
Engagement
Stakeholder
Engagement
Stakeholder
Engagement
Project
Management
Project
Management
Project
Management
Thoothukudi
Thoothukudi
-
0.01
-
0.01 Direct
Thoothukudi
Thoothukudi
-
0.05
-
0.05 Direct
Thoothukudi
Thoothukudi
0.05
-
0.04
0.04 Direct
Thoothukudi
Thoothukudi
-
-
-
-
Direct
Thoothukudi
Thoothukudi
0.12
-
-
- Taru
Thoothukudi
Thoothukudi
0.1
-
0.07
0.07 Subhash Mittal
Thoothukudi
Thoothukudi
0.11
-
0.08
0.08 BVG India
132 Salary
133 Provision
Sub-Total
Grand Total
Admin
Thoothukudi
Thoothukudi
-
-
-
-
(0.13)
-
12.02
104.38
2.89
48.62
0.17
3.10
-
(0.13)
3.06
51.72
*Difference in sum of activity wise expenditure and total expenditure is due to round off of activity wise figures.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 179
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure B
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, 2014.
1
2
3
4
5
6
Sl. No. Requirement
Ratio of the remuneration of each director to the
median remuneration of the employees of the
Company for the financial year
Percentage increase in remuneration of each director,
Chief Financial Officer,Chief Executive Officer,
Company Secretary or Manager, if any, in the financial
year
Disclosure
Name of the Director
Navin Agarwal (1)
Tarun Jain
G. R. Arun Kumar
Srinivasan
Venkatakrishnan (2)
Name
Navin Agarwal
Tarun Jain
G. R. Arun Kumar
Kuldip Kaura (3)
Prerna Halwasiya (4)
Bhumika Sood (5)
Category
Executive Chairman
Whole-Time Director
Whole-Time Director &
Chief Financial Officer
Whole-Time Director &
Chief Executive Officer
Ratio
488.97
350.21
100.31
Nil
Category
Increment Percentage
Executive Chairman
Whole-Time Director
Whole-Time Director &
Chief Financial Officer
Interim Chief Executive
Officer
Company Secretary &
Compliance Officer
Company Secretary &
Compliance Officer
3%
10%
25%
3%
26%
Nil
Percentage increase in the median remuneration
of employees in the financial year
The median remuneration of the employees in the financial year was
increased by 5.90%
Number of permanent employees on the rolls of
company
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
Affirmation that the remuneration is as per the
remuneration policy of the Company
There were 9,823 employees of Vedanta Limited as on March 31, 2019
Average increment in FY 2019 for Managerial Personnel (M4 and Above):
9.68%
Average Increment in FY 2019 for non Managerial Personnel (M5 and
Below): 10.58%
No exceptional increase given in the managerial remuneration.
Yes
Notes:
1. The ratio inclusive of remuneration received from Vedanta Resources Limited, UK, the Holding Company, for Mr. Navin Agarwal is 501.39.
2.
Mr. Srinivasan Venkatakrishnan will not receive any remuneration from Vedanta Limited. He will receive the entire remuneration from the holding
company i.e. Vedanta Resources Limited UK.
3.
For the period from April 1, 2018 till August 30, 2018.
4. For the period from July 31, 2018 till March 31, 2019.
5. Ms. Bhumika Sood resigned from the position of Company Secretary & Compliance Officer w.e.f. June 16, 2018.
180
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Annexure C
Form No. MGT-9
Extract of Annual Return
as on the financial year ended on March 31, 2019
[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 – 400 093, Maharashtra
E-mail 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 Fintech Private Limited (Erstwhile Karvy Computershare Private Limited)
Karvy Selenium Tower No. B, Plot No.31-32, Gachibowli,
Financial District, Nanakramguda, Serilingampally, Hyderabad,
Telangana – 500 032, India
E-mail ID: einward.ris@karvy.com
Tel: +91 40 33211000 / 67162222
Fax: +91 40 23311968
Website: www.karvyfintech.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:-
Name and Description
of main products/services
Sl. No.
1.
2.
3.
Copper & Copper products
Aluminum & Aluminum products
Extraction of crude petroleum and natural gas
NIC Code of the
Product/service
24201
24202
0610/ 0620
% to total turnover
of the Company
17.77
55.42
18.38
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:
Sl. No. Company*
CIN / GLN
1
2
3
4
Twin Star Holding Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
-
-
-
-
Holding/
Subsidiary/Associate
Holding Company
Holding Company
Holding Company
Holding Company
% shares held
37.11%
10.80%
1.19%
1.03%
Applicable
Section
2(46)
2(46)
2(46)
2(46)
Note:
* All the above entities are subsidiaries of Volcan Investment Limited, the ultimate Holding Company
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 181
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure C continued
Copper Mines of Tasmania Proprietory Limited
Thalanga copper mines Proprietory Limited
Talwandi Sabo Power Limited
Sesa Resources Limited
Sesa Mining Corporation Limited
Subsidiaries
Hindustan Zinc Limited
Bharat Aluminium Company Limited
Sl.
No.
1
2
3 MALCO Energy Limited
4
5
6 Monte Cello B.V.
7
8
9
10 Sterlite Ports Limited
11 Maritime Ventures Private Limited
12 Goa Sea Port Private Limited
13 Vizag General Cargo Berth Private Limited
14 Paradip Multi Cargo Berth Private Limited
15 Bloom Fountain Limited
16 Twin Star Energy Holdings Limited
17 Twin Star Mauritius Holdings Limited
18 Western Cluster Limited
19 Sterlite (USA) Inc.*
20 Fujairah Gold FZC
21 THL Zinc Ventures Limited
22 THL Zinc Limited
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, Netherlands
39 Cairn India Holdings Limited
40 Cairn Energy Hydrocarbons Limited
41 Cairn Exploration (No. 2) Limited
42 Cairn Energy Gujarat Block 1 Limited
43 Cairn Energy Discovery Limited
44 Cairn Energy India Proprietory Limited
45 CIG Mauritius Holdings Private Limited
46 CIG Mauritius Private Limited
47 Cairn Lanka (Private) Limited
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
53 Vedanta Star Limited
54 Electrosteel Steels Limited
RoshSkor Township (Proprietory) Limited
Gaurav Overseas Private Limited
Goa Maritime Private Limited
Associate
1
2
3
4 Madanpur South Coal Company Limited
5
Rampia Coal Mine and Energy Private Limited
Notes:
Following Companies became Subsidiaries during the year:
Vedanta Star Limited on April 23, 2018
Electrosteel Steels Limited on June 4, 2018
* under liquidation
182
Holding/
Subsidiary/ Associate
CIN / GLN
L27204RJ1966PLC001208
Subsidiary
U74899DL1965PLC004518 Subsidiary
U31300TN2001PLC069645 Subsidiary
Subsidiary
----
Subsidiary
----
Subsidiary
----
L40101PB2007PLC031035
Subsidiary
U13209GA1965PLC000030 Subsidiary
U13209GA1969PLC000091 Subsidiary
U40109TN2010PLC084216 Subsidiary
U61200TN2013PTC091762 Subsidiary
U63000TN2016PTC111287 Subsidiary
U35100TN2010PTC075408 Subsidiary
U35100TN2011PTC079116 Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
U13209JH2018PLC011308
L27310JH2006PLC012663
----
Associate
U45200MH1989PTC052534 Associate
U61200GA2003PTC003250 Associate
U10300CT2006PLC020006 Associate
U10101OR2008PTC009827 Associate
% shares held
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%
100%
90%
50%
50%
50%
18.05%
17.39%
Applicable Section
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(87)
2(87)
2(6)
2(6)
2(6)
2(6)
2(6)
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS IV. SHARE HOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
a) Category-wise Share Holding
Category
Code
Category of
Shareholders
(I)
(A)
(II)
PROMOTER
No. of Shares held at the beginning
of the year (April 1, 2018)
No. of Shares held at the end
of the year (March 31, 2019)
Demat
Physical
(III)
(IV)
Total
(V)
% of
Total
Shares
(VI)
Demat
Physical
(VII)
(VIII)
Total
(IX)
% of
Total
Shares
%
Change
during
the year
(X)
(XI)
(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)
AND PROMOTER GROUP
Indian
Individual/HUF
160,656 -
160,656
0.01
160,656
-
160,656
0.01
0.00
Central Government/State
- -
-
Government(s)
Bodies Corporate
- -
-
Financial Institutions/Banks
- -
-
Others
- -
-
-
-
-
-
- -
-
- -
- -
- -
-
-
-
-
-
-
-
-
-
-
-
Sub-Total A(1) :
160,656
-
160,656
0.01 160,656 -
160,656
0.01
0.00
Foreign
Individuals (NRIs/Foreign
- -
-
-
- -
-
-
-
Individuals)
Bodies Corporate
1,764,165,424 -
1,764,165,424
47.46 1,764,165,424 -
1,764,165,424
47.46
0.00
Institutions
- -
-
Qualified Foreign Investor
- -
-
Others
- -
-
-
-
-
- -
-
- -
-
- -
-
-
-
-
-
-
-
Sub-Total A(2) :
1,764,165,424
-
1,764,165,424
47.46 1,764,165,424 - 1,764,165,424
Total A=A(1)+A(2)
1,764,326,080
-
1,764,326,080
47.47 1,764,326,080 - 1,764,326,080
PUBLIC SHAREHOLDING
Institutions
Mutual Funds/UTI
224,144,231 7,200
224,151,431
6.03 424,278,056 7,200
424,285,256
Financial Institutions/Banks
239,318,297 36,420
239,354,717
6.44 241,397,734 36,420
241,434,154
Central Government/State
- -
-
Government(s)
Venture Capital Funds
- -
-
-
-
- -
-
- -
-
Insurance Companies
20,660,864 -
20,660,864
0.56 29,511,947 -
29,511,947
Foreign Institutional Investors 670,925,115 9,784
670,934,899
18.05 611,421,324 9,784
611,431,108
Foreign Venture Capital
- -
-
-
- -
-
Investors
Qualified Foreign Investor
- -
-
Others
- -
-
-
-
- -
-
- -
-
47.46
47.47
0.00
0.00
11.41
6.50
5.38
0.06
-
-
-
-
0.79
16.45
0.23
(1.60)
-
-
-
-
-
-
Sub-Total B(1) :
Non-Institutions
Bodies Corporate
Individuals
1,155,048,507 53,404
1,155,101,911
31.08 1,306,609,061 53,404
1,306,662,465
35.15
4.07
314,098,655 792,916
314,891,571
8.47 116,326,606 350,764
116,677,370
3.14
(5.33)
(i) Individuals holding nominal
164,709,999
14,607,056
179,317,055
4.82 207,199,602 11,364,303
218,563,905
5.88
1.06
share capital upto ` 2 lakh
(ii) Individuals holding
24,166,559 -
24,166,559
0.65
14,650,566 -
14,650,566
0.39
(0.26)
nominal share capital in
excess of ` 2 lakh
(c)
Others
Clearing Members 6,134,255 -
6,134,255
0.17
5,193,604
-
5,193,604
Foreign Bodies
7,794 -
7,794
0.00 7,000
-
7,000
Foreign Bodies-DR
2,359,415 -
2,359,415
0.06
1,270,234
-
1,270,234
Foreign Nationals
100 -
100
0.00 1,280 -
1,280
I E P F
1,060,879 -
1,060,879
0.03
2,407,129
-
2,407,129
NBFC
32,660 -
32,660
0.00 45,235 -
45,235
Non-Resident Indians (NRI)
3,730,460 164,599
3,895,059
0.10 5,776,912 147,799
5,924,711
NRI Non-Repatriation
2,335,948 -
2,335,948
0.06 2,965,013 -
2,965,013
Overseas Corporate Bodies
1,100 -
1,100
0.00 1,100 -
1,100
Qualified Institutional Buyer
- -
-
0.00 90
-
90
0.14
0.00
0.03
0.00
0.06
0.00
0.16
0.08
0.00
0.00
(0.03)
0.00
(0.03)
0.00
0.04
0.00
0.06
0.02
0.00
0.00
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 183
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
No. of Shares held at the beginning
of the year (April 1, 2018)
No. of Shares held at the end
of the year (March 31, 2019)
Category
Code
Category of
Shareholders
(I)
(II)
Demat
Physical
(III)
(IV)
Total
(V)
ESOS Trusts
9,233,871 -
9,233,871
Trusts
5,904,930 2,756
5,907,686
% of
Total
Shares
(VI)
0.25
0.16
Demat
Physical
(VII)
(VIII)
Total
(IX)
14,998,702
-
14,998,702
14,719,947 2,756
14,722,703
(d)
Qualified Foreign Investor
- -
-
0.00 - -
-
Sub-Total B(2) :
533,776,625 15,567,327
549,343,952
14.77 385,563,020 11,865,622
397,428,642
Total B=B(1)+B(2) :
1,688,825,132 15,620,731
1,704,445,863
45.85 1,692,172,081 11,919,026
1,704,091,107
Total (A+B) :
3,453,151,212 15,620,731
3,468,771,943
93.32 3,456,498,161 11,919,026
3,468,417,187
% of
Total
Shares
(X)
0.40
0.40
0.00
10.69
45.84
93.31
%
Change
during
the year
(XI)
0.15
0.24
0.00
(4.08)
(0.01)
(0.01)
(C)
(1)
(2)
SHARES HELD BY
CUSTODIANS,
AGAINST WHICH
DEPOSITORY RECEIPTS
HAVE BEEN ISSUED
Promoter and Promoter
99,292,708 -
99,292,708
2.67 99,292,708 -
99,292,708
2.67
0.00
Group *
Public
149,131,988 -
149,131,988
4.01 149,486,744 -
149,486,744
4.02
Grand Total (A+B+C) :
3,701,575,908 15,620,731
3,717,196,639
100.00 3,705,277,613 11,919,026
3,717,196,639
100.00
0.01
0.00
b) Shareholding of Promoter/Promoter Group
Shareholding at the beginning
of the year (April 1, 2018)
Shareholding at the end
of the year (March 31, 2019)
Change in
Shareholding
during the year
%
Sl.
No. Shareholder’s Name
1
2
Twin Star Holdings Limited*
Finsider International Company Limited
3 Westglobe Limited
4 Welter Trading Limited
5
6
7
8
9
Agarwal Galvanising Private Limited
Hare Krishna Packaging Private Limited
Sterlite Metal Rolling Mills Private Limited
Richter Holdings Limited, Cyprus
Vedanta Resources Cyprus Limited
10 Vedanta Resources Holdings Limited
11 Vedanta Finance UK Limited
12 Monte Cello NV Netherlands Antilles
13 Vedanta Resources Limited, UK (Earlier Vedanta
Resources Plc)
14 Vedanta Resources Finance Limited
15 Vedanta Resources Finance II Plc
16 Anil Agarwal Discretionary Trust
17 Conclave PTC Limited
18 Volcan Investments Limited
19 Ankit Agarwal
20 Pratik Pravin Agarwal
21 Suman Didwania
22 Sakshi Mody
23 Pravin Agarwal
24 Dwarkaprasad Agarwal
25 Anil Agarwal
26 Vedvati Agarwal
27 Navin Agarwal
28 Kiran Agarwal
29 Agnivesh Agarwal
30 Priya Agarwal
Total
No. of
Shares
1,379,377,457
401,496,480
44,343,139
38,241,056
0
0
0
0
0
0
0
0
0
0
0
0
0
0
36,300
0
87,696
18,000
18,660
0
0
0
0
0
0
0
% of total
Shares
of the
Company
% of Shares
pledged/
encumbered
to total shares
No. of Shares
37.11
10.80
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 1,379,377,457
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
401,496,480
44,343,139
38,241,056
0
0
0
0
0
0
0
0
0
0
0
0
0
0
36,300
-
87,696
18,000
18,660
-
-
-
-
-
-
-
% of total
Shares
of the
Company
37.11
10.80
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
1,863,618,788
50.14
0.00 1,863,618,788
50.14
% of Shares
pledged/
encumbered
to total
shares
No. of
shares
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
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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
0.000
*Twinstar Holdings Limited (Promoter) holds 24,823,177 ADS representing 99,292,708 equity shares. One (1) American Depository Shares represents Four
(4) equity shares.
184
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
c) Change in Promoters’ Shareholding
There has been no change in the shareholding of Promoters during the financial year 2018-19.
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
1
LIFE INSURANCE CORPORATION OF INDIA 236,640,744
6.37
2
ICICI PRUDENTIAL - MUTUAL FUNDS
19,056,459
0.51
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
0
18,000
25/05/2018
236,658,744
18,000
0
720
0
25/05/2018
236,640,744
720
14/12/2018
236,641,464
0
14/12/2018
236,640,744
30/03/2019
236,640,744
0
1,001,208
06/04/2018
20,057,667
227,139
0
7,385
729
0
486
0
0
438
0
976
0
0
06/04/2018
19,830,528
243
13/04/2018
19,830,771
0
0
20/04/2018
19,823,386
27/04/2018
19,822,657
552
04/05/2018
19,823,209
0
04/05/2018
19,822,723
3,584
3,467
11/05/2018
19,826,307
18/05/2018
19,829,774
0
18/05/2018
19,829,336
611
25/05/2018
19,829,947
0
25/05/2018
19,828,971
4,559,048
01/06/2018
24,388,019
1,732
0
01/06/2018
24,386,287
0
0
0
227
0
0
0
110
0
0
972
0
1,215
0
9,624
3,333,644
08/06/2018
27,719,931
16,125,773
15/06/2018
43,845,704
4,292,967
22/06/2018
48,138,671
0
22/06/2018
48,138,444
9,426,685
29/06/2018
57,565,129
6,596,086
06/07/2018
64,161,215
5,860,679
13/07/2018
70,021,894
0
13/07/2018
70,021,784
3,380,411
20/07/2018
73,402,195
161,960
27/07/2018
73,564,155
0
27/07/2018
73,563,183
20,774
03/08/2018
73,583,957
0
03/08/2018
73,582,742
771,809
10/08/2018
74,354,551
0
10/08/2018
74,344,927
0
1,327,700
17/08/2018
75,672,627
24,364
0
17/08/2018
75,648,263
0
4,019,688
24/08/2018
79,667,951
19,837
0
24/08/2018
79,648,114
0
0
0
5,860,519
31/08/2018
85,508,633
19,663,581
07/09/2018
105,172,214
11,830,180
14/09/2018
117,002,394
5,556
0
14/09/2018
116,996,838
0
0
31
0
0
0
0
3,346,989
21/09/2018
120,343,827
15,185,208
28/09/2018
135,529,035
0
28/09/2018
135,529,004
6,750,516
05/10/2018
142,279,520
6,712,591
12/10/2018
148,992,111
1,951,553
19/10/2018
150,943,664
1,339,032
26/10/2018
152,282,696
649,976
0
26/10/2018
151,632,720
0
0
0
0
0
0
0
1,345,395
02/11/2018
152,978,115
95,430
09/11/2018
153,073,545
598,508
16/11/2018
153,672,053
1,524,808
23/11/2018
155,196,861
11,549,111
30/11/2018
166,745,972
669,888
07/12/2018
167,415,860
1,069,340
14/12/2018
168,485,200
% of total
shares of the
Capital
6.37
6.37
6.37
6.37
6.37
0.54
0.53
0.53
0.53
0.53
0.53
0.53
0.53
0.53
0.53
0.53
0.53
0.66
0.66
0.75
1.18
1.30
1.30
1.55
1.73
1.88
1.88
1.97
1.98
1.98
1.98
1.98
2.00
2.00
2.04
2.04
2.14
2.14
2.30
2.83
3.15
3.15
3.24
3.65
3.65
3.83
4.01
4.06
4.10
4.08
4.12
4.12
4.13
4.18
4.49
4.50
4.53
Reason
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 185
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
3
HDFC TRUSTEE COMPANY LIMITED -
MUTUAL FUNDS
55,060,452
1.48
186
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
0
0
3,505
21/12/2018
168,488,705
200,668
28/12/2018
168,689,373
6,290
0
28/12/2018
168,683,083
0
0
0
1
0
0
5,510
31/12/2018
168,688,593
2,302,858
04/01/2019
170,991,451
1,674
11/01/2019
170,993,125
0
11/01/2019
170,993,124
2,720,026
18/01/2019
173,713,150
1,227
25/01/2019
173,714,377
249,184
0
25/01/2019
173,465,193
0
4,242
01/02/2019
173,469,435
751,582
0
01/02/2019
172,717,853
0
9,236,613
08/02/2019
181,954,466
1,882
0
08/02/2019
181,952,584
0
1,540,901
15/02/2019
183,493,485
5,057
0
10,164
0
15/02/2019
183,488,428
1,978
22/02/2019
183,490,406
0
22/02/2019
183,480,242
0
2,441
01/03/2019
183,482,683
598,356
0
01/03/2019
182,884,327
0
1,201,004
08/03/2019
184,085,331
6,499
0
2,900
0
3,231
0
0
08/03/2019
184,078,832
2,904
15/03/2019
184,081,736
0
15/03/2019
184,078,836
62,758
22/03/2019
184,141,594
0
22/03/2019
184,138,363
1,619
29/03/2019
184,139,982
500,058
0
29/03/2019
183,639,924
30/03/2019
183,639,924
0
6,027
06/04/2018
55,066,479
612,933
0
6,000
0
06/04/2018
54,453,546
2,350
13/04/2018
54,455,896
0
13/04/2018
54,449,896
0
300,358
20/04/2018
54,750,254
300,000
0
20/04/2018
54,450,254
0
0
718
27/04/2018
54,450,972
1,030
04/05/2018
54,452,002
382,000
0
04/05/2018
54,070,002
0
0
0
776
0
0
201,123
11/05/2018
54,271,125
265,383
18/05/2018
54,536,508
630,963
25/05/2018
55,167,471
0
25/05/2018
55,166,695
961,180
01/06/2018
56,127,875
11,978,606
08/06/2018
68,106,481
1,361,000
0
08/06/2018
66,745,481
0
0
0
4,051
0
206
0
0
0
705,110
15/06/2018
67,450,591
340,812
22/06/2018
67,791,403
5,672,474
29/06/2018
73,463,877
0
29/06/2018
73,459,826
2,014,405
06/07/2018
75,474,231
0
06/07/2018
75,474,025
2,621,916
13/07/2018
78,095,941
2,454
20/07/2018
78,098,395
840,373
27/07/2018
78,938,768
7,911
0
27/07/2018
78,930,857
0
0
1,887,891
03/08/2018
80,818,748
582,807
10/08/2018
81,401,555
% of total
shares of the
Capital
4.53
4.54
4.54
4.54
4.60
4.60
4.60
4.67
4.67
4.67
4.67
4.65
4.89
4.89
4.94
4.94
4.94
4.94
4.94
4.92
4.95
4.95
4.95
4.95
4.95
4.95
4.95
4.94
4.94
1.48
1.46
1.46
1.46
1.47
1.46
1.46
1.46
1.45
1.46
1.47
1.48
1.48
1.51
1.83
1.80
1.81
1.82
1.98
1.98
2.03
2.03
2.10
2.10
2.12
2.12
2.17
2.19
Reason
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
4
5
PTC CABLES PRIVATE LIMITED
42,730,200
ADITYA BIRLA SUN LIFE TRUSTEE PRIVATE
LIMITED - MUTUAL FUNDS
39,499,878
1.15
1.06
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
23
0
0
0
Purchase
Date No. of Shares
0
10/08/2018
81,401,532
3,401
17/08/2018
81,404,933
2,202,555
24/08/2018
83,607,488
965
31/08/2018
83,608,453
19,729
0
31/08/2018
83,588,724
0
6,798
07/09/2018
83,595,522
11,400
0
3,678
0
0
596
0
0
0
0
0
07/09/2018
83,584,122
1,115
14/09/2018
83,585,237
0
14/09/2018
83,581,559
444,010
21/09/2018
84,025,569
1,371,062
28/09/2018
85,396,631
0
28/09/2018
85,396,035
1,011,806
05/10/2018
86,407,841
1,612,283
12/10/2018
88,020,124
214,416
19/10/2018
88,234,540
4,555,631
26/10/2018
92,790,171
799,750
0
26/10/2018
91,990,421
0
211
0
0
0
0
0
0
0
0
3,011
0
0
193
0
0
0
0
0
152
0
2,294
0
0
0
8,060
02/11/2018
91,998,481
0
02/11/2018
91,998,270
2,037
2,220
2,328
09/11/2018
92,000,307
16/11/2018
92,002,527
23/11/2018
92,004,855
1,010,218
30/11/2018
93,015,073
164,146
07/12/2018
93,179,219
7,577
3,858
3,773
14/12/2018
93,186,796
21/12/2018
93,190,654
28/12/2018
93,194,427
0
28/12/2018
93,191,416
4,025
1,809
31/12/2018
93,195,441
04/01/2019
93,197,250
0
04/01/2019
93,197,057
7,219
5,497
3,549
9,048
11/01/2019
93,204,276
18/01/2019
93,209,773
25/01/2019
93,213,322
01/02/2019
93,222,370
2,505,040
08/02/2019
95,727,410
0
08/02/2019
95,727,258
5,744
15/02/2019
95,733,002
0
15/02/2019
95,730,708
7,026
8,463
2,233
22/02/2019
95,737,734
01/03/2019
95,746,197
08/03/2019
95,748,430
1,581
0
08/03/2019
95,746,849
0
505,265
15/03/2019
96,252,114
1,146
0
5,545
0
4,362
0
0
15/03/2019
96,250,968
8,502
22/03/2019
96,259,470
0
22/03/2019
96,253,925
20,108
29/03/2019
96,274,033
0
29/03/2019
96,269,671
30/03/2019
96,269,671
30/03/2019
42,730,200
1,248,502
0
06/04/2018
38,251,376
0
582,000
13/04/2018
38,833,376
2,273,998
0
13/04/2018
36,559,378
0
343,000
20/04/2018
36,902,378
2,122,506
685,000
0
0
20/04/2018
34,779,872
27/04/2018
34,094,872
% of total
shares of the
Capital
2.19
2.19
2.25
2.25
2.25
2.25
2.25
2.25
2.25
2.26
2.30
2.30
2.32
2.37
2.37
2.50
2.47
2.47
2.47
2.47
2.48
2.48
2.50
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.51
2.58
2.58
2.58
2.58
2.58
2.58
2.58
2.58
2.59
2.59
2.59
2.59
2.59
2.59
2.59
1.15
1.03
1.04
0.98
0.99
0.94
0.92
Reason
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Nil
Sale
Purchase
Sale
Purchase
Sale
Sale
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 187
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
188
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
0
Purchase
Date No. of Shares
47,250
18/05/2018
34,142,122
2,594,500
0
18/05/2018
31,547,622
0
959,694
25/05/2018
32,507,316
132,563
0
25/05/2018
32,374,753
0
0
670,000
01/06/2018
33,044,753
4,124,250
08/06/2018
37,169,003
153,254
0
08/06/2018
37,015,749
0
931,000
15/06/2018
37,946,749
1,600,000
0
15/06/2018
36,346,749
0
6,050
22/06/2018
36,352,799
2,251,000
907,800
1,320,000
100,000
0
0
0
0
22/06/2018
34,101,799
29/06/2018
33,193,999
06/07/2018
31,873,999
13/07/2018
31,773,999
0
372
20/07/2018
31,774,371
415,000
0
20/07/2018
31,359,371
0
444,327
27/07/2018
31,803,698
61,827
0
27/07/2018
31,741,871
0
1,750
03/08/2018
31,743,621
175,000
2,807,013
0
15,750
0
1,628,000
367,500
0
0
03/08/2018
31,568,621
10/08/2018
28,761,608
777
17/08/2018
28,762,385
0
17/08/2018
28,746,635
261
24/08/2018
28,746,896
0
0
24/08/2018
27,118,896
31/08/2018
26,751,396
0
600,000
07/09/2018
27,351,396
2,000,000
0
07/09/2018
25,351,396
0
0
0
6,020,750
14/09/2018
31,372,146
31,500
28/09/2018
31,403,646
3,110,000
05/10/2018
34,513,646
126,500
0
05/10/2018
34,387,146
0
3,025,000
12/10/2018
37,412,146
67,500
379,250
0
0
12/10/2018
37,344,646
19/10/2018
36,965,396
0
522
26/10/2018
36,965,918
24,500
155,750
26/10/2018
36,941,418
02/11/2018
36,785,668
0
500,000
30/11/2018
37,285,668
836,500
1,023
0
0
30/11/2018
36,449,168
07/12/2018
36,448,145
0
119,600
14/12/2018
36,567,745
650,000
723,500
100,050
1,017,000
3,460,000
1,490,000
259,900
4,003,800
407,100
0
0
0
0
0
0
0
0
0
14/12/2018
35,917,745
21/12/2018
35,194,245
28/12/2018
35,094,195
04/01/2019
34,077,195
11/01/2019
30,617,195
18/01/2019
29,127,195
25/01/2019
28,867,295
01/02/2019
24,863,495
08/02/2019
24,456,395
0
6,698
15/02/2019
24,463,093
185,000
144,000
222,200
0
0
0
15/02/2019
24,278,093
22/02/2019
24,134,093
01/03/2019
23,911,893
0
23,000
08/03/2019
23,934,893
52,900
0
15/03/2019
23,881,993
0
5,544
29/03/2019
23,887,537
84,885
0
29/03/2019
23,802,652
30/03/2019
23,802,652
% of total
shares of the
Capital
0.92
0.85
0.87
0.87
0.89
1.00
1.00
1.02
0.98
0.98
0.92
0.89
0.86
0.85
0.85
0.84
0.86
0.85
0.85
0.85
0.77
0.77
0.77
0.77
0.73
0.72
0.74
0.68
0.84
0.84
0.93
0.93
1.01
1.00
0.99
0.99
0.99
0.99
1.00
0.98
0.98
0.98
0.97
0.95
0.94
0.92
0.82
0.78
0.78
0.67
0.66
0.66
0.65
0.65
0.64
0.64
0.64
0.64
0.64
0.64
Reason
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Sale
Sale
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Sale
Purchase
Sale
Purchase
Sale
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Sale
Purchase
Sale
Sale
Purchase
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Sale
Sale
Purchase
Sale
Purchase
Sale
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
% of total
shares of the
Capital
6
UNIT TRUST OF INDIA - MUTUAL FUNDS
18,873,996
0.51
0
0
46,222
06/04/2018
18,920,218
17,826
13/04/2018
18,938,044
3,681
0
13/04/2018
18,934,363
0
0
1,043,282
20/04/2018
19,977,645
435,550
27/04/2018
20,413,195
8,860
0
27/04/2018
20,404,335
0
332,647
04/05/2018
20,736,982
32,000
0
04/05/2018
20,704,982
0
0
56,958
11/05/2018
20,761,940
278,687
18/05/2018
21,040,627
12,281
0
18/05/2018
21,028,346
0
0
0
0
0
0
0
146,815
25/05/2018
21,175,161
508,239
01/06/2018
21,683,400
1,294,124
08/06/2018
22,977,524
104,567
15/06/2018
23,082,091
2,952,587
22/06/2018
26,034,678
25,864
29/06/2018
26,060,542
38,615
06/07/2018
26,099,157
1,485,750
06/07/2018
24,613,407
73,000
13/07/2018
24,686,407
9,538
0
13/07/2018
24,676,869
0
102,314
20/07/2018
24,779,183
4,978
0
5,183
0
0
0
0
20/07/2018
24,774,205
77,865
27/07/2018
24,852,070
0
27/07/2018
24,846,887
38,043
03/08/2018
24,884,930
958,171
10/08/2018
25,843,101
427,981
17/08/2018
26,271,082
110,250
0
17/08/2018
26,160,832
0
52,450
24/08/2018
26,213,282
42,740
0
24/08/2018
26,170,542
0
0
296,696
31/08/2018
26,467,238
69,930
07/09/2018
26,537,168
204,750
0
07/09/2018
26,332,418
0
0
0
70,260
14/09/2018
26,402,678
52,905
21/09/2018
26,455,583
394,627
28/09/2018
26,850,210
9,802
0
28/09/2018
26,840,408
0
0
0
0
205,900
05/10/2018
27,046,308
526,627
12/10/2018
27,572,935
23,493
19/10/2018
27,596,428
93,393
26/10/2018
27,689,821
533,750
0
26/10/2018
27,156,071
0
0
0
0
0
0
0
0
0
2,028,075
02/11/2018
29,184,146
367,080
09/11/2018
29,551,226
63,671
16/11/2018
29,614,897
38,455
23/11/2018
29,653,352
20,255
30/11/2018
29,673,607
275,574
07/12/2018
29,949,181
8,763
14/12/2018
29,957,944
357,125
21/12/2018
30,315,069
81,800
28/12/2018
30,396,869
8,148
0
28/12/2018
30,388,721
0
0
0
17,834
31/12/2018
30,406,555
109,680
04/01/2019
30,516,235
269,132
11/01/2019
30,785,367
12,388
0
11/01/2019
30,772,979
0
1,090,277
18/01/2019
31,863,256
0.51
0.51
0.51
0.54
0.55
0.55
0.56
0.56
0.56
0.57
0.57
0.57
0.58
0.62
0.62
0.70
0.70
0.70
0.66
0.66
0.66
0.67
0.67
0.67
0.67
0.67
0.70
0.71
0.70
0.71
0.70
0.71
0.71
0.71
0.71
0.71
0.72
0.72
0.73
0.74
0.74
0.74
0.73
0.79
0.79
0.80
0.80
0.80
0.81
0.81
0.82
0.82
0.82
0.82
0.82
0.83
0.83
0.86
Reason
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 189
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
7
STATE BANK OF INDIA - MUTUAL FUNDS
14,070,844
0.38
190
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
0
13,800
0
0
0
0
0
Purchase
Date No. of Shares
1,075,170
25/01/2019
32,938,426
0
25/01/2019
32,924,626
459,516
01/02/2019
33,384,142
84,537
08/02/2019
33,468,679
381,972
15/02/2019
33,850,651
44,311
22/02/2019
33,894,962
117,121
01/03/2019
34,012,083
499,100
0
01/03/2019
33,512,983
0
0
2,846
0
1,189
0
81,773
92,314
08/03/2019
33,605,297
98,690
15/03/2019
33,703,987
0
15/03/2019
33,701,141
59,528
22/03/2019
33,760,669
0
22/03/2019
33,759,480
24,677
29/03/2019
33,784,157
0
0
29/03/2019
33,702,384
30/03/2019
33,702,384
1,146,586
06/04/2018
15,217,430
3,727
0
06/04/2018
15,213,703
0
0
0
0
0
0
0
0
0
0
0
11
0
37,113
13/04/2018
15,250,816
115,422
20/04/2018
15,366,238
142,036
27/04/2018
15,508,274
248,736
04/05/2018
15,757,010
170,236
11/05/2018
15,927,246
125,995
18/05/2018
16,053,241
120,229
25/05/2018
16,173,470
60,752
01/06/2018
16,234,222
173,764
08/06/2018
16,407,986
88,170
15/06/2018
16,496,156
6,046,396
22/06/2018
22,542,552
0
22/06/2018
22,542,541
105,385
29/06/2018
22,647,926
16,753
0
29/06/2018
22,631,173
0
135,773
06/07/2018
22,766,946
450,000
0
06/07/2018
22,316,946
0
151,308
13/07/2018
22,468,254
2,217
0
13/07/2018
22,466,037
0
0
251
0
3,080
2
0
0
0
1,688
0
197
0
5,226
0
0
194,010
20/07/2018
22,660,047
125,202
27/07/2018
22,785,249
0
27/07/2018
22,784,998
97,483
03/08/2018
22,882,481
0
03/08/2018
22,879,401
173,051
10/08/2018
23,052,452
0
10/08/2018
23,052,450
60,929
17/08/2018
23,113,379
163,347
24/08/2018
23,276,726
783,650
31/08/2018
24,060,376
0
31/08/2018
24,058,688
244,347
07/09/2018
24,303,035
0
07/09/2018
24,302,838
220,396
14/09/2018
24,523,234
0
14/09/2018
24,518,008
181,727
21/09/2018
24,699,735
135,656
28/09/2018
24,835,391
34,074
0
28/09/2018
24,801,317
0
0
0
0
133,920
05/10/2018
24,935,237
208,211
12/10/2018
25,143,448
94,980
19/10/2018
25,238,428
180,207
26/10/2018
25,418,635
% of total
shares of the
Capital
0.89
0.89
0.90
0.90
0.91
0.91
0.91
0.90
0.90
0.91
0.91
0.91
0.91
0.91
0.91
0.91
0.41
0.41
0.41
0.41
0.42
0.42
0.43
0.43
0.44
0.44
0.44
0.44
0.61
0.61
0.61
0.61
0.61
0.60
0.60
0.60
0.61
0.61
0.61
0.62
0.62
0.62
0.62
0.62
0.63
0.65
0.65
0.65
0.65
0.66
0.66
0.66
0.67
0.67
0.67
0.68
0.68
0.68
Reason
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
8
VANGUARD EMERGING MARKETS STOCK
INDEX FUND, A SERIES OF VANGUARD
INTERNATIONAL EQUITY INDEX FUNDS
28,183,000
0.76
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
0
4
0
0
206,881
02/11/2018
25,625,516
0
02/11/2018
25,625,512
117,638
09/11/2018
25,743,150
194,670
16/11/2018
25,937,820
1,625
0
16/11/2018
25,936,195
0
111,992
23/11/2018
26,048,187
150,000
23/11/2018
25,898,187
0
0
87,952
30/11/2018
25,986,139
20,956
07/12/2018
26,007,095
27,122
0
07/12/2018
25,979,973
0
32,551
14/12/2018
26,012,524
145,561
0
14/12/2018
25,866,963
0
0
131,400
21/12/2018
25,998,363
77,269
28/12/2018
26,075,632
42,681
0
28/12/2018
26,032,951
0
0
0
0
45,492
31/12/2018
26,078,443
272,816
04/01/2019
26,351,259
352,834
11/01/2019
26,704,093
239,787
18/01/2019
26,943,880
120,230
0
18/01/2019
26,823,650
0
237
0
0
512,105
25/01/2019
27,335,755
0
25/01/2019
27,335,518
396,009
01/02/2019
27,731,527
3,566,983
08/02/2019
31,298,510
500,000
0
08/02/2019
30,798,510
477
0
0
152,189
15/02/2019
30,950,699
0
15/02/2019
30,950,222
151,383
22/02/2019
31,101,605
340,358
01/03/2019
31,441,963
53,032
0
01/03/2019
31,388,931
0
267,833
08/03/2019
31,656,764
8,461
0
08/03/2019
31,648,303
0
0
334,049
15/03/2019
31,982,352
254,882
22/03/2019
32,237,234
96,975
0
22/03/2019
32,140,259
0
106,879
29/03/2019
32,247,138
313,720
0
105,300
40,500
40,500
1,646,887
135,432
55,404
88,236
0
0
0
0
0
0
0
0
0
29/03/2019
31,933,418
30/03/2019
31,933,418
11/05/2018
28,077,700
01/06/2018
28,037,200
15/06/2018
27,996,700
22/06/2018
26,349,813
29/06/2018
26,214,381
06/07/2018
26,158,977
13/07/2018
26,070,741
0
0
0
0
40,650
16/11/2018
26,111,391
105,690
23/11/2018
26,217,081
51,490
07/12/2018
26,268,571
146,340
21/12/2018
26,414,911
371,242
0
28/12/2018
26,043,669
0
0
153,642
01/02/2019
26,197,311
490,065
08/02/2019
26,687,376
394,202
0
22/03/2019
26,293,174
0
0
60,927
29/03/2019
26,354,101
0
30/03/2019
26,354,101
% of total
shares of the
Capital
0.69
0.69
0.69
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.70
0.71
0.72
0.72
0.72
0.74
0.74
0.75
0.84
0.83
0.83
0.83
0.84
0.85
0.84
0.85
0.85
0.86
0.87
0.86
0.87
0.86
0.86
0.76
0.75
0.75
0.71
0.71
0.70
0.70
0.70
0.71
0.71
0.71
0.70
0.70
0.72
0.71
0.71
0.71
Reason
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 191
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
9
GOVERNMENT OF SINGAPORE
23,940,659
0.64
10 HSBC POOLED INVESTMENT FUND - HSBC
10,273,802
0.28
POOLED ASIA PACIFIC EX JAPAN EQUITY
FUND
192
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
0
840,878
06/04/2018
24,781,537
364,217
9,924
15,364
49,619
37,328
8,614
1,957,819
0
0
0
0
0
0
0
20/04/2018
24,417,320
27/04/2018
24,407,396
04/05/2018
24,392,032
11/05/2018
24,342,413
18/05/2018
24,305,085
25/05/2018
24,296,471
01/06/2018
22,338,652
0
0
0
0
733,455
08/06/2018
23,072,107
532,876
15/06/2018
23,604,983
113,947
22/06/2018
23,718,930
143,939
20/07/2018
23,862,869
10,233
13,148
115,162
0
0
0
0
0
0
0
0
0
27/07/2018
23,852,636
03/08/2018
23,839,488
10/08/2018
23,724,326
331,197
24/08/2018
24,055,523
759,166
31/08/2018
24,814,689
460,816
07/09/2018
25,275,505
420,514
14/09/2018
25,696,019
267,929
21/09/2018
25,963,948
171,147
05/10/2018
26,135,095
21,441
0
12/10/2018
26,113,654
0
0
0
0
68,045
19/10/2018
26,181,699
43,815
02/11/2018
26,225,514
152,727
23/11/2018
26,378,241
753,729
30/11/2018
27,131,970
37,876
0
07/12/2018
27,094,094
0
211,919
21/12/2018
27,306,013
11,143
185,096
1,888,505
661,391
355,803
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
28/12/2018
27,294,870
04/01/2019
27,109,774
08/02/2019
25,221,269
01/03/2019
24,559,878
08/03/2019
24,204,075
749,195
15/03/2019
24,953,270
126,301
22/03/2019
25,079,571
30/03/2019
25,079,571
64,620
06/04/2018
10,338,422
75,811
20/04/2018
10,414,233
40,667
04/05/2018
10,454,900
127,911
11/05/2018
10,582,811
546,696
18/05/2018
11,129,507
290,978
25/05/2018
11,420,485
398,355
01/06/2018
11,818,840
1,194,975
08/06/2018
13,013,815
517,404
15/06/2018
13,531,219
988,058
22/06/2018
14,519,277
100,000
29/06/2018
14,619,277
908,092
06/07/2018
15,527,369
210,000
13/07/2018
15,737,369
511,000
20/07/2018
16,248,369
603,000
27/07/2018
16,851,369
100,000
19/10/2018
16,951,369
100,000
26/10/2018
17,051,369
300,000
02/11/2018
17,351,369
186,106
23/11/2018
17,537,475
1,518,397
30/11/2018
19,055,872
171,459
07/12/2018
19,227,331
% of total
shares of the
Capital
0.67
0.66
0.66
0.66
0.65
0.65
0.65
0.60
0.62
0.64
0.64
0.64
0.64
0.64
0.64
0.65
0.67
0.68
0.69
0.70
0.70
0.70
0.70
0.71
0.71
0.73
0.73
0.73
0.73
0.73
0.68
0.66
0.65
0.67
0.67
0.67
0.28
0.28
0.28
0.28
0.30
0.31
0.32
0.35
0.36
0.39
0.39
0.42
0.42
0.44
0.45
0.46
0.46
0.47
0.47
0.51
0.52
Reason
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Sl.
No. Name of the Share Holder
Shareholding at the beginning
of the year April 1, 2018
No. of Shares
% of total
shares of the
Company
Transaction Details
Cumulative Holding
during the year 2018-19
Sale
Purchase
Date No. of Shares
0
0
0
0
0
0
0
0
170,503
14/12/2018
19,397,834
557,949
28/12/2018
19,955,783
696,523
11/01/2019
20,652,306
656,287
18/01/2019
21,308,593
1,505,841
25/01/2019
22,814,434
289,318
01/02/2019
23,103,752
490,640
08/02/2019
23,594,392
427,566
15/02/2019
24,021,958
563,431
200,000
200,000
0
0
0
01/03/2019
23,458,527
08/03/2019
23,258,527
29/03/2019
23,058,527
30/03/2019
23,058,527
% of total
shares of the
Capital
0.52
0.54
0.56
0.57
0.61
0.62
0.63
0.65
0.63
0.63
0.62
0.62
Reason
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Sale
e) Shareholding of Directors and Key Managerial Personnel:
Shareholding at the beginning
of the year
Sl.
No.
Name of the
Director or KMP
1 Mr. G. R. Arun Kumar
Whole-Time Director &
Chief Financial Officer
2 Mr. Aman Mehta
Non-Executive
Independent Director
No. of Shares
8,000
(equity shares)
26,000
(preference
shares)
-
% of total
shares of the
Company
0.00
Date
-
Increase/
Decrease in share
holding
Cumulative Shareholding
during the year
Reasons
No. of Shares
% of total
shares of the
Company
-
-
8,000
0.00
0.00
26.10.2018
26,000
Redemption of
shares as per the
terms of issuance
-
-
-
28.09.2018
25.01.2019
195 Market Purchase
279 Market Purchase
195
474
0.00
0.00
Note: No other Directors or KMPs besides the above hold shares in the Company
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
Additions - Principal amount
Reductions - Principal amount
Net Change relating to principle amount
Net movement in interest due but not paid
Net movement in interest accrued but not due
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 deposits
Unsecured Loans
Deposits
Total
Indebtedness
20,532
20,181
-
705
-
4
21,237
20,185
14,005
(8,511)
5,494
-
184
29,048
(33,051)
(4,003)
-
2
26,026
16,178
-
889
-
6
26,914
16,184
-
-
-
-
-
-
-
-
-
-
-
-
-
40,713
-
709
41,422
43,053
(41,562)
1,491
-
186
42,204
-
895
43,099
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 193
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure C continued
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-Time Directors and/or Manager and Key Managerial Personnel:
Particulars
Designation
Period
Gross salary
Navin
Agarwal(1)
Executive
Chairman
Tarun Jain
G. R. Arun
Kumar
Srinivasan
Venkatakrishnan (2)
Prerna
Halwasiya
Kuldip
Kaura(3)
Bhumika
Sood
WTD WTD & CFO
WTD & CEO
CS CEO(ceased)
CS(ceased)
FY2019
FY2019
FY2019
1/3/2019–
31/03/2019
31/7/2019 –
31/3/2019
1/4/2018–
30/08/2018
1/4/2018–
16/06/2018
Total
(a)
(b)
(c)
Salary as per provisions contained in Section
17(1) of the Income-tax Act, 1961
89,598,663 131,994,945 30,356,413
Value of perquisites u/s 17(2) of Income-tax
Act, 1961*
12,917,480
Profits in lieu of salary under Section 17(3) of
Income-tax Act, 1961
-
-
-
59,600
-
Stock Option@
Sweat Equity
Commission
- as % of profit
- others, specify
(Annual Performance Bonus^)
Others, please specify (PF, Superannuation,
Medical and LTA)
132,651,161 47,698,772
15,204,789
-
-
-
-
-
-
-
-
-
59,855,112 40,235,919
14,683,392
12,053,782
-
2,689,824
Total (A)
307,076,198 219,929,636 6,299,4018
Overall Ceiling as per the Act
11% of Net Profits
-
-
-
-
-
-
-
-
-
-
2,251,960
11,141,414
677,151 266,020,546
-
-
775,869
-
-
-
-
-
-
-
-
-
-
-
-
-
12,977,080
-
196,330,591
-
-
-
611,948
8,884,232
710,929 124,981,532
250,488
-
66,809
15,060,903
3,890,265
20,025,646
1,454,889 615,370,652
Notes:
^The Annual Performance bonus to Executive Directors & KMPs is for FY 2018 which is paid during FY 2019.
* 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’. Further 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 WTDs & Key Management Personnel are not included above.
@It is the perquisite value of the options exercises under, Vedanta Resources Limited (erstwhile VRPLC) stock options and deferred stock option Scheme.
Additionally, on account of delisting of Vedanta Resources Limited, UK , all the outstanding shares of Executive Directors and KMPs were bought by Volcan
under Cash Offer Plan and the same has not been included above.
1. Sitting fees and commission paid to Mr. Navin Agrawal from HZL was ` 2,00,000 and ` 1,500,000 respectively during the FY2019.
In addition to the above, Mr. Navin Agarwal received remuneration from Vedanta Resources Limited, UK, the Holding Company amounting to GBP 85,000
(` 77.97 lakh) for the financial year ending March 31, 2019.
2. Mr. Srinivasan Venkatakrishnan is not paid any remuneration from the Company. The entire remuneration will be received from the Holding Company i.e.
Vedanta Resources Limited. The remuneration received by Mr. Venkat through Vedanta Resources Limited for the period from March 1, 2019 till March 31,
2019 is ` 102.31 lakh.
Additionally, Mr. Venkatakrishnan received an amount of GBP 1,467,528 (` 1,346 lakh) from Vedanta Resources Limited, UK in lieu of Anglo Gold Ashanti
bonus & LTIP as per agreed terms of appointment.
3.In addition to the above, Mr. Kuldip Kaura received remuneration from Vedanta Resources Limited, UK, the Holding Company amounting to GBP 415,738
(` 381.36 lakh).
Additionally, the Company had paid an annual bonus of ` 1,25,08,755 for FY 2018 to Mr. Thomas Albanese who was the Whole-Time Director & Chief
Executive Officer of the Company till August 31, 2017.
194
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS B. Remuneration to other directors:
Sl.
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
Name of Directors
Mr. Aman Mehta
Mr. K. Venkataramanan
Ms. Lalita D Gupte
Mr. Ravi Kant
Mr. U. K. Sinha
Mr. Aman Mehta
Mr. K. Venkataramanan
Ms. Lalita D. Gupte
Mr. Ravi Kant
Mr. U. K. Sinha
-
a)
Fee for attending board/ committee meetings
b) Commission
Ms. Priya Agarwal
Ms. Priya Agarwal
c)
Others, please specify (includes salary, allowances, contribution to
PF & superannuation, perquisites & LTIP value)
Total (2)
Total (B)= (1+2)
Nil
Overall Ceiling as per the Act for Directors who are neither MD or WTD 1% of Net Profit
Total Remuneration (A) + (B)
VII. PENALTIES/ PUNISHMENT/ COMPOUNDING OF OFFENCES:
Total Amount
1,100,000
650,000
1,100,000
1,150,000
900,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
-
42,400,000
600,000
7,500,000
8,100,000
50,500,000
665,870,652
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 2018-19 195
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure D
Secretarial Audit Report
for the financial year ended March 31, 2019
To,
The Members
Vedanta Limited
1st Floor, C Wing,
Unit 103, Corporate Avenue, Atul Projects,
Chakala, Andheri (East), Mumbai,
Maharashtra- 400093
We have conducted the Secretarial Audit of the compliance
of applicable statutory provisions and the adherence to
good corporate governance 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,
2019 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, 2019
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 76
of Securities and Exchange Board of India (Depositories
and Participants) Regulations, 2018;
(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, 2018;
(d) The Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014;
(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 Management has identified and confirmed
the following laws as being specifically applicable
to the Company:
a)
b)
c)
The Mines and Minerals (Development and
Regulation) Act, 2015 and the rules and regulations
made thereunder.
Indian Boilers Act, 1923 and rules and regulations
made thereunder.
Manufacture, Storage and Import of Hazardous
Chemical Rule, 1989.
We have also examined compliance with the applicable
clauses/ Regulations of the following:
(i)
Secretarial Standards issued by The Institute of Company
Secretaries of India.
(ii) Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
During the period under review, the Company has substantially
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. 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/Committee 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.
(e) The Securities and Exchange Board of India (Issue and
Listing of Debt Securities) Regulations, 2008;
1)
The Board of Directors have approved redemption
of 3,010,000,000 nos., 7.5% Non-Convertible
196
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Non-Cumulative Redeemable fully paid-up Preference
Shares at a face value of `10 each.
2)
The shareholders in its meeting held on August 24, 2018
have approved offer or invitation to subscribe the Non-
Convertible Debentures or other Debt Securities upto
` 20,000 Crore.
3)
The Company has issued Non-Convertible Debentures of ₹
` 5,000 Crores during the period under review
4)
The Company has redeemed Non-Convertible
Debentures of ` 3,700 Crores during the period under
review. Further, the Company has approved an early
redemption of 5,000 (Five Thousand) 7.80% Secured,
Rated, Non-Cumulative, Redeemable, Non-Convertible
Debentures (NCDs), of face value of ` 10,00,000 (Rupees
Ten Lacs) each aggregating to ` 500 Crores (Five Hundred
Crores) at par.
5)
6)
The Company made an Investment of ` 19.62 Crores in
Equity Shares of Vedanta Star Limited, a wholly owned
subsidiary of Company.
The Company through its subsidiary, Vedanta Star
Limited, acquired 90% of Electrosteel Steels Limited under
the IBC process.
For Chandrasekaran Associates
Company Secretaries
Dr. S. Chandrasekaran
Senior Partner
Membership No.: A1644
Certificate of Practice No.: 715
Date: May 07, 2019
Place: Delhi
Note: This report is to be read with our letter of even date which is annexed as Annexure-A and forms an integral part of this report.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 197
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Annexure-A to Secretarial Audit report
To,
The Members
Vedanta Limited
1st Floor, C Wing,
Unit 103, Corporate Avenue, Atul Projects,
Chakala, Andheri (East), Mumbai,
Maharashtra - 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.
2.
We have followed the audit practices and processes as were 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.
Whenever 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 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.
For Chandrasekaran Associates
Company Secretaries
Dr. S. Chandrasekaran
Senior Partner
Membership No.: A1644
Certificate of Practice No.: 715
Date: May 07, 2019
Place: Delhi
198
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Annexure E
(A) CONSERVATION OF ENERGY:
Conservation of natural resources continues to be the key
focus area of your Company. Some of the important steps
taken in this direction are as follows:-
Oil & Gas Business:
Rajasthan Operations:
i.
Sustainable disposal of off-spec polymer through
Common Effluent Treatment Plant, Balotra for reuse as
coagulant in waste water treatment: 108 KL & 4,940
Kgs till December, 2018 for FY2019 (100% for reuse).
ii.
iii.
iv.
Avoidance of GHG emission by renewable power
generation (solar): 4,32,765 KWH for FY2019 till
December, 2018.
Recycling of trade effluent by growth partners for reuse
in drilling activities - 2,710 KL
Increased uptime of Vapor Recovery Units (>80%) to
minimise the gas flaring resulted in avoidance of flaring
approx. 5 MMSCFD and GHG emission reduction of
approx. 125,000 tons of CO2e.
v.
Conversion of diesel driven engines to electric driven
engines at MS-01 and MWP-18 resulted in reduction of
GHG emission by approx. 12,000 tonnes of CO2e.
vi. Replacement of conventional lights with LED at ESS1A
& ESS2 with saving potential of 85,000 KWH/year.
vii. Utilisation of associated gas for power generation and
thereby reducing GHG emission by avoiding flaring of
gas. Gas based engine generators installed at satellite
fields, 1.1 MW at NI-02 and 500 KVA at Kaam West
resulted in reduction of GHG emission by ~4,945
tonnes of CO2e.
viii. 29 nos. of 25W solar LED lights installed at 8 oil fields:
Total power savings due to the initiative was 366.85
KWH for 46 days.
ix. 75 nos. of 250W LED Street Lights & 25 nos. of 100
W LED Street Lights installed at RGT & Gas Well Pads:
Total power savings due to the initiative was 5,541.25
KWH for 31 days.
x.
120 nos. of 36W tube lights replaced with 18W tube
lights & 65 nos. of 18W tube lights replaced with 10W
tube lights: Total power savings due to the initiative was
11,706.24 KWH for 182 days.
Copper Business:
i.
ii.
Compressor replacement with screw type, kaeser make
– (644 KWH per day reduction)
Holding furnace VFD drive installation – (50847 KWH
per annum reduction)
iii.
Boiler specific fuel consumption reduction from 74L/
MT to 73.6L/MT – (0.4 L FO consumption reduction)
Iron Ore Business:
VAB:
i.
Replacement of blower motors (2 nos.) with the energy
efficient blower motors at PID 1, achieving power
saving of 38 KW.
ii.
Usage of blast furnace waste dust in sinter mix and
oxygen enrichment in sinter combustion burner to
reduce coke breeze consumption from 60 kg/TS to 58
Kg/TS resulting in saving of 10.76 Million K Cal.
iii.
iv.
v.
Pulverised coal injection 35 Kg/THM in PID-1 which is a
replacement fuel to Coke.
Introduced oxygen enrichment at BF-1 at a rate of 0.3%
in blast furnace, resulting in pulverised coal injection
increase from 35 Kg/THM to 40 Kg/THM.
Production of foundry grade pig iron outside the
blast furnace (Qty. 162,375 T) by using ferro-silicon
compound resulting in saving of 40Kg/THM
coke consumption
vi. Oxygen enrichment in sinter plant resulting
in reduction in internal return fines and coke
breeze consumption.
vii. Stock-house and PCM bucket elevator elimination
by making direct unloading arrangement, achieving
power saving of 20 KW.
viii. Installation of lighting automation boxes (38 nos.) in
PID-1. (Saving – 20 KW)
ix. Replacement of conventional lamps with the LED
lamps in Value Addition Business in phase manner.
(Saving – 40 KW).
x.
Introduction of energy efficient compressor in Blast
furnace-3. (Saving – 15 KW)
IOK:
i.
Replacement of around 250 nos. 250W replaced with
LED 90W resulting in cost saving of `1,68,000/month
and energy saving of 7,200 KWh/month.
ii.
iii.
Replacement of 1,000W metal halide lights with LED
300W in IR lights resulting savings of 0.8Lts/day/IR.
Grid power supply to new workshop and gate 2
resulting in savings of ` 2,000/day.
Power Business:
2400MW Jharsuguda:
Implemented Projects:
i.
Reduce pressure drop across the flue gas path in all
boilers by conducting CFD test, saving of 28.6 MU.
ii.
iii.
iv.
v.
Arrest compressed air leakages in the plant,
saving of 0.766 MU.
Reduce the pressure setting of instrument air
compressor, saving of 0.674 MU.
Replace fluorescent and metal halide lamps with LED,
saving of 0.011 MU.
Optimise the usage of artificial lighting in the plant,
saving of 0.002 MU.
vi. Operate the raw water pumps with equal throttling in
both pumps, saving of 0.0001 MU.
Under Implementation Projects:
i.
ii.
Optimise performance of CEP’s in all units.
Replace timer based drain valves with level sensor
based drain valves.
iii.
Optimise seal air fan performance by installing VFD.
iv. Optimise the operation of LDO Pump by installing VFD.
v.
Optimise instrument air system by avoiding
desiccant type drying.
vi. Install VFD for chilled water pumps.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 199
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure E continued
CPP 1215MW Jharsuguda:
i.
ii.
iii.
iv.
v.
Cooling tower fan blade angle correction in order
to increase airflow in 22 fans. Improvement of air
flow from 16.7 lacm3/Hr. to 18.9 Lacm3/Hr resulting
improvement in turbine heat rate by 9.9 Kcal/Kwh.
Sliding pressure operation during partial load
to save 5.2 Kcal/Kwh in heat rate and 200 Kw in
BFP consumption.
Reduction of unaccounted loss by 10 Kcal and reduce
turbine heat rate from 2,098 to 2,088 Kcal.
Establish mill operating window to improve air fuel
ratio up to 1.1.
Periodic condenser tube cleaning by bullet to reduce
condenser differential pressure up to design level and
improve vacuum.
vi. Optimisation of RH spray and RH steam temperature,
water chemistry, running of drives & stopping
idle equipment.
vii. U#5,6,9,2,1 partial FF bag replacement with new bag
(emission reduced from 42 Mg/m3 to 30 Mg/m3)
viii. Sp. Raw consumption reduce from 2.03 to 2.00 by
maintaining COC (cycle of concentration) and leakage
arresting in raw water pipeline.
(B) ADDITIONAL INVESTMENTS AND PROPOSALS, IF
ANY, BEING IMPLEMENTED FOR REDUCTION OF
CONSUMPTION OF ENERGY
Oil & Gas Business:
Rajasthan Operations:
i.
Installation of 2 MW GEGs at NI-02 field.
ii.
Conversion of second diesel driven engine to electric
driven engine at MS-01.
iii.
Installation of 29 25W Solar LED lights in 8 Oil Fields.
iv.
Installation of LED Street lights at RGT & Gas Well Pads.
v.
Installation of LED tube lights at RGT & Gas Well pads.
Ravva Operations:
i.
Installation of 24V, 0.37KW DC Motor instead motive
fluid of existing gas lift to reduce gas consumption and
cold venting at offshore platforms.
ii.
Procured and installed 150nos of 60W LED light
fittings for replacing of existing 70W HPSV lamps in
Plant installed 500nos of 20W LED light fittings for
replacing of existing 40W fluorescent lamps in LQ
& plant procured and installed 40nos. of 150W LED
light fittings for replacing of existing 250W HPSV
Lights in Plant.
ix. Stopping of one CW pump load <90MW.
Cambay Operations:
Aluminium Business:
Smelter Plant Jharsuguda:
Electrical Energy:
DC Energy saving
i.
Cell lining design modification carried out
for energy saving.
i.
Installation of LED lights at Perimeter wall.
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.
ii.
100% graphitised cathode pot implementation.
iv. Alternate green fuel for furnace oil.
AC auxiliary Energy saving
i.
Variable frequency drive installed in cast house cooling
tower with temperature feedback control.
ii.
iii.
iv.
Variable frequency drive installed in pump house for
flow control and optimisation.
Implementation of 100% LED street lights in
Smelter Plant-1.
Replacement of conventional lights with LED lights in
office and MCC area.
v.
Installation of 10 KW capacity Solar Power Plant.
Lanjigarh – Refinery:
The following major energy conservation measures are
taken at Lanjigarh:-
i. Conversion of conventional light to LED.
ii. Downsizing the MP Blower.
Lanjigarh – CGPP:
i. Cooling tower fan hub modification.
ii. Replacement of recirculation valve in BFP.
iii.
LED conversion from conventional lighting system
in switchyards.
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.
iii.
iv.
Replacement of cooling tower pump at PID-1 with
energy efficient pump.
Replacement of return water pump at PID-1 with
energy efficient pump.
Replacement of compressor at PID-2 with energy
efficient compressors.
IOK:
i.
Utilising 40 KVA DG in place of 125KVA and keeping
125KVA as stand-by – 80% load factories diesel savings
of 8L/hr. i.e. 64L/day.
200
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Power Business:
2400MW Jharsuguda:
i.
New design eco tube replaced in boiler to
reduce forced outage.
(C) IMPACT OF ABOVE MEASURES IN A) AND B) FOR
REDUCTION OF ENERGY CONSUMPTION AND
CONSEQUENT IMPACT OF COST OF PRODUCTION OF
GOODS
ii.
iii.
Generator health monitoring device installed in
Unit#3 to detect premature failure of generator hence
improved reliability.
CFD analysis & implementation of its
recommendation for APC reduction by 750KW & SHR
improvement by 5Kcal/Kwh.
1215MW Jharsuguda:
i.
Installation of VFD’s for HT DRIVES.
ii. Green cooling tower installation.
iii.
Automatic condenser ball cleaning system
for condenser.
iv. Additional Economiser coil installation.
v.
Installation of energy efficient motors.
Aluminium Business:
Refinery:
Sl.
No. Project
Replacement or
Maintenance of Faulty
Steam traps
Target Area
DIG, EVAP,
White 1, Red 2
Estimated
Savings (KWH)
1,359,000.00
Installation of rooftop 100
KWp Solar Power panel
Admin
building
128,109.60
3 VFD conversion of
Evaporation
60,924.60
Oil & Gas Business:
Rajasthan Operations:
i.
ii.
Recovery of Hydrocarbon (associated gas) by VRU
operations.
Conservation of diesel and electricity by installation of
GEGs at satellite fields.
iii.
Reduction in consumption of power, due to installation
of solar LED lights.
Ravva Operations:
i.
24V, 0.37KW DC motor installed for OSI chemical
pumping at RC platform and corresponding cold
venting gas reduced per day by 100SCM approx.
same amount of gas exports as sales and saving per
annum is ` 4 lakh per annum.
ii.
iii.
iv.
Procured and installed 150 nos. of 60W LED light
fittings for replacing of existing 70 W HPSV lamps in
plant and would corresponding to saving of 6,570
KWH/year and cost saving is ` 32,850/Annum.
Procured and installed 500 nos. of 20W LED light fittings
for replacing of existing 40W fluorescent lamps in LQ
& plant and would corresponding to saving of 43,800
KWH/year and cost saving is ` 2,19,000/annum.
Procured and installed 40nos of 150 W LED light
fittings for replacing of existing 250 W HPSV Lights in
plant and would corresponding to saving of 17,520
KWH/year. And cost saving is ` 87,600/annum.
Evaporation
163,080.00
Cambay Operations:
1
2
4
5
6
7
8
Good Quality Condensate
pump: 29-PU-0001B
Installation of Test Liquor
VFD: 26-PU-0010
Running combination of
most efficient pumps I &
II in Raw water pumping
station at Lanjigarh
Pulley replacement of
oversized pumps to attain
BEP
Energy management
system and SCADA
implementation in entire
refinery
Lanjigarh
Pump House
452,600.00
White 1
3,146,400.00
Refinery
-
Replacement of
conventional lighting
system with LED
Area lighting,
Office lighting
and Floodlight
272,160.00
9 Use of blowers instead of
compressed air in Sump
pumps
CGPP:
10 Turbine #1 vacuum
improvement
PDS, DIG
7,455.577.00
Turbine #1
13,453,085.00
11 Increase in pump
CW Pump
82,992.00
efficiency by applying
corrosion resistance coating
in CW pump impellers
12 Cooling Tower
Cooling Tower
162,000.00
performance improvement
13 Installation of LED lights
Boiler & AVR
9,597.60
i.
Installation of LED lights at Perimeter wall : Total power
savings due to the initiative would be 36,800 KWH/year
and cost savings of ` 2.8 lakh/year.
Iron Ore Business:
VAB:
i.
The energy conservation measures undertaken in
various areas in 2018-19 have an annual saving potential
of 1,117 MWh of electricity per annum for VAB.
ii.
The energy conservation measures proposed in various
areas in 2019-20 have an annual saving potential of
2,688 MWh of electricity per annum for VAB.
IOK:
i.
The energy conservation measures undertaken in
various areas in 2018-19 have an annual saving
potential of 19.51 KL of diesel & 86.4 MWh of
electricity for IOK.
ii.
The proposals being implemented for energy
conservation measures have an annual saving potential
of 22.59 KL of diesel for IOK.
Power Business:
2400MW Jharsuguda:
i. Lower SOC achieved 0.135 ml/Kwh in Q1 FY19.
ii. Lower % DM makeup achieved 0.40 % in Q1 FY19.
iii. Lower SCC achieved 761 gm/Kwh in July, 2018.
iv. Lower DM Makeup achieved 0.32% in February, 2019.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 201
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Annexure E continued
1215MW Jharsuguda:
0.28% APC (auxiliary power consumption) improvement
in FY19.
Achieved best figures in APC since commissioning
Yearly
Half Yearly
Quarterly
Month
9.23
9.05
8.94
8.93
FY-19
H2-19
Q4 FY-18
Jan-19
Aluminium Business:
CPP Plant Jharsuguda:
i.
0.12% Auxiliary Power Reduction at power plant
ii.
Reduction of 0.05 ml/MWh specific oil consumption in
power business.
(D) THE STEPS TAKEN BY THE COMPANY FOR UTILISING
ALTERNATE SOURCES OF ENERGY
Oil & Gas Business:
Rajasthan Operations:
i.
A proposal for setting up a 20 MW solar power
generation plant is under consideration.
Copper Business:
i. Planning to Setup 9 MW solar power plant
ii.
iii.
iv.
v.
Purchased Renewable Energy Certificates of non-solar
23,019 certificates as per Tamil Nadu Electricity
Regulatory Commission regulations.
Planning to setup sewage treatment plant to treat
municipal sewage to generate fresh water for plant &
nearby villages’ usage.
Planning to setup a natural gas terminal for alternate
usage of FO & LPG.
Planning to setup desalination plant to self-sustain on
the water requirement.
Technology Absorption, Adaptation and Innovation
Aluminium Business:
Lanjigarh Refinery:
Sl.
No. Project Description
1
Solar plant
installation
Targeted Area of
Improvement
Solar plant for
supply to admin
offices
Estimate Annual
Savings (KWH)
128,110
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
utilisation of blast furnace waste dust.
ii. Oxygen enrichment in sinter plant.
iii. Pulverised coal injection in Blast furnace-1 & 2.
Benefits as a result of R&D
i.
Reduction in coke breeze consumption by 2
kg/ton of sinter.
ii.
Reduction in coke breeze consumption and reduction
in internal return fines generation.
iii. Replacement of coal with coke at a ratio of 0.8.
Aluminium Business:
CPP Plant Jharsuguda:
i. LED Installation in CPP all over the plant.
Efforts in brief made towards
technology absorption,
adaptation and innovation
Oil & Gas Business:
Rajasthan Operations:
•
Proactive and non-destructive inspection of 33KV OHL line poles and conductors using drone
technology as part of electrical safety.
•
Real time plant employee head count system has been implemented at MPT, AW#8, BH#6, BWP#15,
SUPP, PSY, CPF and RGT. This system provides display of relevant plant employee head count in real
time. Client/user displays for monitoring/information is provided in MPT CCR Control room and access
control room desk at reception building outside Gate 1 of MPT. RGT display is provided at RGT control
room and RGT security control room.
•
Real time plant head count information will be of immense use during the HSE mustering exercise.
Iron Ore Business:
VAB:
a) Pulverised coal injection in blast furnace 1 & 2.
b) Oxygen enrichment in sinter plant and blast furnace 1 & 2.
c) Use of high thermal conductivity bricks for oven bed.
d) Hydraulic compacting station in Met coke division.
202
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Power Business:
2400MW Jharsuguda:
• Implementation of online boiler tube leakage detection system
1215MW Jharsuguda:
• Automatic online condenser ball cleaning system
• Economiser coil addition
• Green cooling tower
Aluminium Business:
CPP Plant Jharsuguda:
• Selective soot blowing in boilers
• Condenser bullet cleaning
• Isolation of SWAS grab sample
• Condenser tube cleaning
Benefits derived as a result
of above efforts e.g. product
improvement, cost reduction,
product development,
import substitution
Iron Ore Business:
VAB:
a) Reduction in coke rate resulting reduced COP.
b)
Increase in productivity and reduction in coke rate.
c)
Improvement in coke oven productivity.
d) Reduction in fines generation.
Power Business:
2400MW Jharsuguda:
• Reduction in forced outage time.
• Increase in station availability.
1215MW Jharsuguda:
• Improvement in condenser vacuum from 87.5 to 88 KPA.
• Reduction in turbine heat rate by 10 Kcal & DM Make up.
• Reduction of APC from 9.51% to 9.23%.
Aluminium Business:
CPP Plant Jharsuguda:
• Reduction in specific raw water consumption & DM Make up.
• Reduction of APC from 9.51% to 9.23%.
• Condenser tube cleaning for vacuum improvement
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
Copper Division
Technology imported
Ravva Operations:
• Fluid based sealant technology
• Formation Isolation Valves (FIVs).
No
Year of import
Has technology been
fully absorbed
2014-15
Yes
Iron Ore - Value Addition Business:
Hydraulic compacting station in MCD Battery-1. 2017 [MCD]
Yes
Pulverised coal injection in Blast furnace 1& 2.
2017 [PID-1]
Power Business
Aluminium Business
No
No
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 203
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT a
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 205
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Report on Corporate Governance
COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE
Collective consciousness of the organisation to excel in all
management practices to enable wealth maximisation in an all
encompassing manner for society in entirety is the hallmark of
governance at Vedanta.
Our corporate governance is a reflection of our value system
and seven pillars. Through effective corporate governance,
your Board seeks to embed and sustain a culture that will
enable Vedanta to fulfil its purpose and achieve its long-term
strategic objectives, by building durable partnerships and
upholding its core values of safety, teamwork, excellence,
respect and integrity.
As a good corporate citizen, the Company is dedicated
towards following the global best practices built through
conscience, fairness, transparency and accountability in
building confidence of its various stakeholders in it, thereby
paving the way for its enduring success.
VEDANTA CORPORATE GOVERNANCE
7 PILLARS OF VEDANTA
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Guiding principles
Transparency
and
accountability
Policies &
regulatory
framework
Management /
board and
committees
Values & ethics
Monitoring &
internal control
Executing
strategy &
managing risk
Compliance with Global Guidelines and Best Practices
Vedanta has been a front runner in complying with global best
practices in corporate governance.
Consulting. The report tracks corporate disclosure practices
among India’s top 100 publicly listed corporations in terms of
voluntary disclosures, board quality and risk disclosures.
The Securities and Exchange Board of India (‘SEBI’) accepted
some of the recommendations with or without modifications
on March 28, 2018 of the Kotak Committee on Corporate
Governance and consequently amended the SEBI (Listing
Obligations and Disclosure Requirements), Regulations,
2015 (Listing Regulations). Your Company welcomes this
progressive step of SEBI and is substantially in compliance
with the recommendations.
During the year we were ranked among the top companies in
“India Disclosure Index”, 2018, an annual report released by FTI
The Company focuses at following the global best practices.
The governance standards are benchmarked globally
and we strive to adopt the emerging best practices being
followed worldwide.
Besides complying with the statutory guidelines, the Company
has voluntarily adopted and evolved various practices of
governance conforming to highest ethical and responsible
standards of business. These practices reflect the way
business is conducted and value is generated.
206
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Integrated Reporting
Since its inception, Vedanta Limited has taken conscious
efforts to operate in a manner responsible to all stakeholders.
The organisation has maintained the highest standards
of corporate governance all through its operations.
Every decision and action at the Company is taken after
considering the impact they may have on the Company’s
relevant stakeholder groups. This is a true reflection of the
organisation’s integrated thinking, which takes into account
all the resources and relationships that affects Company’s
ability to create sustained value. These resources and
relationships, termed ‘Capitals’, are stocks of value enabling
Company’s operations.
While operating, your Company actively considers its
external environment, the opportunities and challenges, the
organisational strategy to respond to these externalities and
the outputs and outcomes it produces basis its business
activities. Starting FY 2018, the Company has proactively
commenced reporting its annual performance and strategy
using an integrated report, using content elements and
guiding principles outlined in the International Integrated
Reporting framework. The organisation has continued its
Integrated Reporting journey and its FY 2019 performance and
forward-looking strategy have been elucidated in the current
Integrated Annual Report. The report takes into account the
following six capitals while reporting:
FINANCIAL CAPITAL
The Company is focussed on optimising capital allocation and maintaining a strong balance sheet while
generating strong FCFs. It also reviews 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 the Company with
world-class mining assets, which are structurally at low cost and have extensive R&R. Additionally, operating the
Company’s mines requires a range of resources, including water and energy, which the Company aims to use
prudently and sustainably.
HUMAN CAPITAL
The Company has employees from across the world and it is committed to provide them with a safe and healthy
work environment. In addition, by creating a culture that nurtures innovation, creativity and diversity, it enables
them to grow personally and professionally while also helping to meet our business goals.
INTELLECTUAL CAPITAL
As a relatively young Company, the Company is keen to embrace technological developments. The Company
is setting up a centre of technological excellence in South Africa, enabling them to nurture and implement
innovative ideas across the business, which lead to operational improvements.
SOCIAL AND RELATIONSHIP CAPITAL
The Company aims to forge strong partnerships by engaging with its key stakeholders, including shareholders
and lenders, suppliers and contractors, employees, governments, communities and the society in general.
These relationships help maintain and strengthen Vedanta’s licence to operate.
MANUFACTURED CAPITAL
The Company invests in assets including best-in-class equipment and machinery to ensure it operates as
efficiently and safely as possible both at its current operations and in its expansion projects. This also supports
its strong and sustainable cash flow generation.
Vedanta’s Sustainability Reporting Journey
Our sustainable development journey continues to create
value for our stakeholders. We have invested our time and
resources in introspecting our actions; we have achieved
our targets and formulated ambitious new ones; we have
adopted global best practices and taken innovative leaps; we
have aligned our standards with industry benchmarks and
charted some of our own. We have done all this and continue
to do it with a singular agenda: ensuring long-term growth for
all stakeholders.
We have been publishing the Sustainability Report for
over a decade now. The reports are structured around our
Sustainable Development Model’s pillars of Responsible
Stewardship, Building Strong Relationships, Adding and
Sharing Value, and Strategic Communications.
Vedanta applies its sustainability performance reporting
criteria based on Sustainability Reporting Standards of Global
Reporting Initiative (GRI Standards) including the Mining and
Metals and Oil & Gas Sector Disclosures, National Voluntary
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 207
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Guidelines on Social, Environmental and Economic Responsibilities of Business (NVG) framed by the Ministry of Corporate Affairs
(MCA), Government of India, United Nations Global Compact (UNGC) principles, International Council on Mining and Metals
(ICMM) and Sustainable Development Goal frameworks for the Company as detailed in the ‘Scope, Boundary and Limitations’.
It reports our approach and disclosure towards triple bottom line principles - People, Planet and Profit.
The Sustainability Report of the Company can be accessed at https://www.vedantalimited.com
BOARD OF DIRECTORS
The Company’s Board of Directors provides entrepreneurial leadership for the Group and strategic direction to the management.
It is collectively responsible for promoting the long-term success of the Group through the creation and delivery of sustainable
shareholder value. The reporting structure, as shown below, between the Board, Board Committees and Management Executive
Committees forms the backbone of the Group’s Corporate Governance framework. As part of its decision-making processes,
the Board considers the long-term consequences of its decisions, the interests of various stakeholders including employees, the
impact of the Group’s operations on the environment and the need to conduct its business ethically. This is achieved through a
prudent and robust risk management framework, internal controls and strong governance processes.
CEO
Shareholders
BOARD OF
DIRECTORS
Executive
Committee
Audit
Committee
Nomination &
Remuneration
Committee
Stakeholder
Reationship
Committee
Corporate Social
Responsibility
Committee
Risk
Management
Committee
Sustainability
Committee
Committee of
Directors
Finance Standing
Committee of
Director
Size, Composition and Tenure of the Board
It is vital to have a well-balanced Board with a combination of
Executive, Non-Executive and Independent Directors on the
Board of the Company to ensure Board’s independence and to
distinct its functions of management and governance.
Effective management and good stewardship are led
by the Board. The Board believes there is an appropriate
balance between Executive and Non-Executive Directors
to promote shareholder interests and govern Vedanta
effectively. As at March 31, 2019, the Board comprises of
ten members, consisting of one Executive Chairman, three
Executive Directors, one Non-Executive Woman Director
and five Non-Executive Independent Directors including one
Woman Director.
Executive
Chairman
Executive
Director
Non-
Executive
Director
10%
30%
10%
Independent
Director
50%
Men
Women
80%
20%
208
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS The details of tenure of the Directors as on March 31, 2019 is given below:
TENURE OF DIRECTORS
Initial Date of
Appointment
Current Tenure From
Current Tenure Till
Tenure as on
March 31, 2019
(in years)
(Months / 12)
Name of Director
Executive Directors
Mr. Navin Agarwal
August 17, 2013
August 1, 2018
July 31, 2023
Mr. Tarun Jain (1)
April 1, 2014
April 1, 2019
March 31, 2020
Mr. G. R. Arun Kumar
November 22, 2016 November 22, 2016 November 21, 2019
Mr. S. Venkatakrishnan
March 1, 2019
March 1, 2019
August 31, 2021
Non-Executive Independent Directors
Mr. Ravi Kant (2)
January 29, 2015
January 29, 2018
May 31, 2019
Mr. K. Venkataramanan
April 1, 2017
April 1, 2017
March 31, 2020
Ms. Lalita D. Gupte (2)
January 29, 2015
January 29, 2018
August 10, 2021
Mr. Aman Mehta
Mr. U. K. Sinha
May 17, 2017
May 17, 2017
May 16, 2020
March 13, 2018
March 13, 2018
August 10, 2021
Non-Executive Directors
Ms. Priya Agarwal
May 17, 2017
May 17, 2017
NA
5.58
5.00
2.33
0.08
4.17
2.00
4.17
1.83
1.00
1.83
0-2 year
2-4 year
4-6 year
4
2
4
(1) W.e.f. April 1, 2019, Mr. Tarun Jain has been re-appointed as a Non-Executive Director;
(2)
Mr. Ravi Kant (on January 28, 2014) and Ms. Lalita D. Gupte (on March 29, 2014) were appointed in ‘casual vacancy’ as Independent Directors.
On January 29, 2015, they were appointed as Independent Directors under Section 149 of the Companies Act, 2013 for a fixed term of 3 years.
Further, the appointment was confirmed by the Shareholders by way of resolution passed through Postal Ballot on March 30, 2015.
Diversity and Inclusion
The Board continues to recognise that an appropriate mix of diversity and skills is key for introducing different perspectives
into Board debate and for better anticipating the risks and opportunities in building a long-term sustainable business. As set
out in the charts below, each member of the Board offers a range of core skills and experience that is relevant to the successful
operation of the Group.
The below table summarises the key qualifications, skills and attributes which are taken into consideration while nominating to
serve on the Board.
Business Leadership
Sustainable success in business at a senior executive level
Financial Expertise
Natural Resources
Capital Projects
Global Experience
ESG
Proficiency in financial accounting and reporting, corporate finance and internal controls,
corporate funding, and associated risks
Senior executive experience in a large, global mining and oil & gas organisations involved in the
discovery, acquisition, development and marketing of natural resources
Experience working in an industry with projects involving large-scale long-cycle capital outlays
Experience in multiple global locations, exposed to a range of political, cultural, regulatory and
business environments
Familiarity with issues associated with workplace health and safety, asset integrity, environment
and social responsibility, and communities
Corporate Governance
Experience with a major organisation that demonstrates rigorous governance standards
Mergers & Acquisition
Experience in corporate transactions and actions and joint ventures
Government & International
Relations
Technology/Digital
Interaction with government and regulators and involvement in public policy decisions
A strong understanding of technology and innovation, and the development and implementation
of initiatives to enhance production
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 209
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
In the table below, the specific areas of focus or expertise of individual board members have been highlighted. However, the
absence of a mark against a member’s name does not necessarily mean the member does not possess the corresponding
qualification or skills:
Name of Director
Mr. Navin Agarwal
Mr. Tarun Jain
Mr. S. Venkatakrishnan
Mr. G. R. Arun Kumar
Ms. Priya Agarwal
Ms. Lalita D. Gupte
Mr. Ravi Kant
Mr. K. Venkataramanan
Mr. U. K. Sinha
Mr. Aman Mehta
Business
Leadership
√
√
√
√
√
√
√
√
√
√
Financial
Expertise
√
√
√
√
√
√
√
√
√
Natural
Resources
√
√
√
√
√
√
Capital
Projects
√
√
√
√
√
√
Areas of Expertise
Global
Experience
√
√
√
√
√
√
√
√
ESG
√
√
√
√
√
Corporate
Governance
√
√
√
√
√
√
√
√
√
√
Government
& International
relations
√
√
√
Mergers &
Acquisition
√
√
√
√
√
√
√
√
√
Technology/
Digital
√
√
√
√
√
√
√
Detailed profile of the Directors can be viewed on the website at https://www.vedantalimited.com
Process for Board Appointments
The Board recognises the benefit that diversity in all its forms,
including but not limited to age, gender, race, ethnic origin,
cultural and educational background, can bring to Board debate
and perspective. The Board is responsible for the selection of
new directors and has delegated the selection process to the
Nomination & Remuneration Committee (NRC). The NRC has a
prescribed process for the selection and appointment of new
Directors and Key Managerial Personnel (KMP). The Committee,
based on a well-defined criterion, makes recommendations to
the Board on the induction of new directors and KMPs.
Board Familiarisation and Induction Programme
To meet our responsibilities, it is imperative for each of
our Board Members to understand their role and duties.
On being appointed to the Board, each Director undergoes a
comprehensive induction programme which is tailored to their
individual needs and also intends to provide an introduction to
the Company’s vision, mission, values, operations, challenges,
structure and risks. Further, through regular formal reporting
process and timely sharing of updates on the Company, it
ensures that our Directors stay updated about any significant
changes therein on a continual basis.
ORIENTATION PROGRAMME UPON INDUCTION
OF NEW DIRECTORS
Visits to plants and business locations are
organised periodically to provide an insight of the
Company’s operations.
Interactive sessions with senior management,
business & functional heads.
Familiarisation pack is uploaded on a secured online
portal which can be accessed only by the Board
members. The pack includes various documents
viz. a viz. Organisational structure, the Company’s
history and milestones, Memorandum & Articles of
Association, latest Annual Report including Form
20F, Code of Conduct, Investor Presentations, CEO/
CFO reports, Minutes of previous meetings, Policies
& Charters etc.
210
OTHER INITIATIVES TO UPDATE THE DIRECTORS
ON A CONTINUAL BASIS
An active communication channel with
executive management which allows free flow of
communication among directors.
Presentations on regulatory and business
environment, business plan, risk management
framework, internal audit & controls, cyber
security, HSE, compliance reports, tax & treasury
reports, key accounting matters, CSR, HR
initiatives, Digitalisation & Technology initiatives
and company policies and other relevant issues.
Update on Company’s and its subsidiaries
performance/ operations/ updates/ major
developments affecting the business by various
reports on quarterly basis along with major stock
exchange announcements, press releases etc.
The detailed familiarisation programme can be
accessed on the Company’s website at
https://www.vedantalimited.com/CorporateGovernance
Membership Term
The Board constantly evaluates the contribution of members
and periodically shares updates with the shareholders about
reappointments consistent with the applicable laws.
Succession Planning
Succession Planning is essential for an organisation since
it benefits in identifying key roles and mapping out ways to
ensure that the organisation has the right people with the right
blend of skills, aptitude, expertise and experiences, in the right
place and at the right time.
As per the NRC Policy of the Company, the NRC recommends
to the Board a succession plan for the appointments made
to the Board of Directors as well as of KMPs. The NRC reviews
such plans on an annual basis and recommend revisions, if
any, to the Board.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS The NRC works with the management and follows the
following process for effective succession planning:
Directors and/or any of the members of the management on
January 31, 2019 and March 28, 2019.
1.
2.
Assessment of potential employees and creation of a
leadership pool;
Development of the talent pool through actions such as
involvement in strategic meetings, leadership workshops
with top management, coaching, anchoring, job rotations,
role enhancement, council memberships and involvement
in cross function projects etc.
Directors’/KMPs conflicts of interest
The Board has an established procedure for the disclosure
of interests and other related matters in line with published
guidance under Companies Act, 2013 and Listing Regulations.
Each Director/KMP must promptly disclose actual or potential
conflicts and any changes, to the Board which are noted at
each Board meeting. The Board considers and authorises
potential or actual conflicts, as appropriate. Directors with a
conflict do not participate in the discussion or vote on the
matter in question.
Further, 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.
Separate Meeting of Independent Directors
Regulation 25 of the Listing Regulations and Section 149 read
with Schedule IV of Companies Act, 2013 mandates that the
Independent Directors of the Company shall hold at least one
meeting in a year, without the presence of Non-Independent
Directors and members of the management and requires all
the Independent Directors to be present at such meeting.
Your Company recognises the crucial role that the
Independent Directors play in ensuring an efficient and
transparent work environment, hence all the Independent
Directors of the Company separately met twice during the
FY 2019 without the presence of any of Non-Independent
At such meetings the Independent Directors discuss, among
other matters flow of information to the Board, governance,
compliances, various other Board related matters, identify
areas where they need clarity or information from management
and to annually review the performance of Non-Independent
Directors, the Board as a whole and the Chairman.
In addition to this, the Independent Directors also meet
separately with the Statutory Auditors to discuss matters such
as key accounting issues, risks, overall control environment
and to invite their overall feedback.
The Independent Directors update the Audit and the Board
about the outcome of the meetings and actions, if any,
required to be taken by the Company.
Performance Evaluation
The effectiveness of the Board is crucial to the overall
success of the Group and the Company undertakes a
formal assessment of the operation of the Board, Board
Committees and individual Directors & Chairman annually.
The evaluation is an important part of the Board’s corporate
governance framework. In terms of the requirements of the
Companies Act, 2013, Listing Regulations and in consonance
with Guidance Note on Board Evaluation issued by SEBI in
January 2017, the Company carries out a comprehensive
externally facilitated Board effectiveness review every year.
This year as well, we engaged the services of a leading
consulting firm to conduct the evaluation independently
through a secured online IT platform. The involvement of
an independent third party has ensured that the process
is rigorous and fair, and thereby ensuring continuous
improvement in the operation of the Board and committees, as
well as the contributions of individual Directors.
The evaluation was based on the criteria and framework
adopted by the Nomination and Remuneration Committee
(NRC) and the evaluation was led by the Chairman of the NRC.
The evaluation was carried out through tailored questionnaires which were pragmatically structured to draw out significant issues
that were relevant to the Board and each of the Board Committees and the individual directors to assist in identifying any areas
for improvement as given below:-
BOARD AS A WHOLE
BOARD COMMITTEES
• Assessment of
• Committee Meeting &
Company as a whole,
its performance, its
goals etc.;
• Composition and
structure;
• Practices and quality;
• Board Environment;
• Progress against
development areas.
Information;
• Committee
Composition &
Operation;
• Specific Committee
responsibilities;
• Progress against
development areas.
INDIVIDUAL
DIRECTORS
• Preparedness and
participation of
the Director for the
meetings;
• Understanding of
Company’s mission,
vision, industry,
business etc.;
• Quality of discussions
during meetings;
• Effectiveness of
Director;
• Quality of the value
additions made.
CHAIRMAN
• Demonstration of
effective Leadership;
• Objectivity in
discussions;
• Constructive
communication &
relationship with other
directors;
• Contribution in
enhancing Company’s
image;
• Availability and
approachability to
discuss sensitive
matters.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 211
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Tailored
questionnaires
prepared by
external agency and
confirmed with the
Chairperson of NRC
Secured online
platform for
providing the
responses
Results of the
evaluation
compiled by
the external
agency without
involvement of the
management
Outcome
and feedback
discussed at the
NRC, Separate
Meeting of IDs and
Board Meeting and
Action Plan agreed
Results were
shared as follows:
•
Evaluation results for
Executive Directors
and Chairman
- directly with
Chairperson of NRC;
• Evaluation results
for all individual
directors - directly
with the Chairman
of the Board and to
respective directors;
• Evaluation of
the Board and
Committees
effectiveness -
directly with all the
Members.
Outcome of Performance Evaluation
An internal review of the progress made on the prior year’s
planned actions was also undertaken and discussed. And it
was noted that the suggestions from the last year evaluation
process have been actioned by the Company.
A report in respect of the feedback from the Directors
in the Board evaluation questionnaires and suggested
recommendations for areas to focus on in the coming
year was briefed by the NRC Chairperson and presented
to the Board for consideration, following which an action
plan was agreed.
Overall, the review determined that the Board as a whole has
been functioning as a cohesive body which is well engaged
with different perspectives. There is a good balance of
skills and experience on the Board to ensure the delivery of
stakeholder goals. It was suggested that given the changing
external environment, there is need for better allocation of
time for discussion on risk and strategy matters. The Board
observed that there is a significant value in conducting an
annual strategic meeting with business heads and senior
management for the same.
The Committees are functioning well and besides the
Committee’s terms of reference as mandated by law,
important issues are being brought up and discussed in
the Committee Meetings. However, given the change in
the investor profile, the Company may evaluate enhancing
the role of Stakeholder Relationship Committee to include
stakeholder engagement.
The Members recorded their overall satisfaction on the board
evaluation process.
Time commitment & other Directorships
The Directors are required to commit sufficient time to fulfil
their responsibilities. The Directors may serve on a number
of other boards provided they continue to demonstrate their
commitment to their role as Directors of the Company.
DIRECTORSHIP AND COMMITTEE MEMBERSHIP DETAILS OF DIRECTORS
Mr. Navin
Agarwal
3
Mr. UK
Sinha
5
2
Mr. Aman
Mehta
6
7
1
Ms. Priya
Agarwal
1
Mr. K.
Venkataramanan
6
3
Ms. Lalita D.
Gupte
7
8
2
Mr. GR Arun
Kumar
Mr. S.
Venkatakrishnan
11
2
1
1
Mr. Ravi
Kant
3
1
Mr. Tarun
Jain
6
2
No. of Directorship
Membership in Committees
Chairperson in Committees
• The no. of Directorships excludes foreign companies but includes Private Companies and Companies under Section 8 of Companies Act 2013.
•
For the membership and chairpersonship in Committees only Audit Committee and Stakeholder Relationship Committee have been considered as per
Regulation 26 of the Listing Regulations. Also, all public limited companies, whether listed or not, have been included and all other companies including
private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013 have been excluded.
212
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Directorship in other Listed Companies in India:
Name of Director
Mr. Navin Agarwal (00006303)
Mr. Aman Mehta (00009364)
Mr. K. Venkataramanan (00001647)
Ms. Lalita D. Gupte (00043559)
Mr. Ravi Kant (00016184)
Mr. U. K. Sinha (00010336)
Ms. Priya Agarwal (05162177)
Mr. Tarun Jain (00006843)
Mr. S. Venkatakrishnan (08364908)
Mr. G. R. Arun Kumar (01874769)
Name of the Listed Entity including Debt Listed Entities
Name of Entity
• Hindustan Zinc Limited
• Wockhardt Limited
• Tata Consultancy Services Limited
• Tata Steel Limited
• Godrej Consumer Products Limited
• Max Financial Services Limited
• Kirloskar Pneumatic Company Limited
• Nilkamal Limited
• Godrej Properties Limited
• Bharat Forge Limited
• India InfraDebt Limited
• ICICI Lombard General Insurance Company Limited
• TVS Motor Company Limited
• Hawkins Cooker Limited
• Havells India Limited
• Housing Development Finance Corporation Limited
–
• Bharat Aluminium Company Limited
–
• Vizag General Cargo Berth Private Limited
Category
Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Chairperson & Independent Director
Chairperson & Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
–
Director
–
Director
Further, w.r.t. directorship and membership of the Directors, it is hereby confirmed that:
1. None of the Directors:
a)
is a Director in more than 20 companies out of which directorship in public limited companies does not exceed 10 in
terms of Section 165 of Companies Act, 2013;
b) holds directorship in more than 8 listed entities pursuant to Regulation 17A(1) of Listing Regulations;
c) acts as an Independent Director in more than 7 listed entities pursuant to Regulation 17A(1) of Listing Regulations;
d)
is serving as an Independent Director in more than 3 listed entities incase they are Whole-Time Director of the Company
pursuant to Regulation 17A(2) of Listing Regulations;
e)
is a member of more than 10 board level committees of Indian public limited companies;
f)
is a Chairperson of more than 5 committees, across all companies in which they are directors;
g) who is serving as a Non-Executive Director has attained the age of seventy-five years;
h)
is related to other Director except Ms. Priya Agarwal. Ms. Agarwal is the daughter of Mr. Navin Agarwal’s elder brother,
Mr. Anil Agarwal;
i) who is serving as an Independent Director has resigned before the expiry of his tenure.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet
the criteria of independence prescribed under the Act and the Listing Regulations and in the opinion of the Board, the
Independent Directors fulfill the said criteria and are independent of the management.
The certificate from Practicing Company Secretary issued as per requirements of Listing Regulations, confirming that none of
the Directors in the Board of the Company have been debarred or disqualified from being appointed or continuing as Director
of Companies by SEBI/ Ministry of Corporate Affairs or any such statutory authority is endorsed to this Report as Annexure III.
2.
3.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 213
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
STATUTORY REPORTS
Report on Corporate Governance continued
MEETINGS OF THE BOARD & COMMITTEES
MEETINGS OF THE BOARD & COMMITTEES
Scheduling of meetings
and agenda matters
Circulation of Agenda
Information presented
at meetings
Conduct and Recording
of meetings
1
2
3
4
• The Board meets at regular intervals to discuss and decide on Company/business
policy and strategy in addition to the statutory and other matters. The Board and
Committee meetings are pre-scheduled and an annual calendar of the meetings
is circulated to the Directors well in advance to facilitate planning of their schedule
and to ensure meaningful participation in the meetings. However, in case of
business exigencies/urgencies resolutions are passed through circulation or
additional meetings are conducted.
• The Board, the Audit Committee and the NRC are facilitated with annual agenda
plan in advance in order to enable the members to focus on key areas of
organisational performance and designing the future strategy. The annual agenda
plans are finalised with the inputs from the board members and are approved by
the Board. Additional agenda matters are taken up on requirement basis.
• The Agenda papers are finalised by the Chairman and the Company Secretary,
in discussion with the CEO & CFO.
• All the Agenda papers are disseminated electronically on a real-time basis.
The papers are uploaded on a secured online platform specifically designed for
this purpose, thereby eliminating circulation of printed agenda papers. The online
platform also enables the Board to access the historical agendas, minutes,
constitutional documents, committee charters, etc. It enables the participants
to make notes and exchange notes amongst each other under a secured
environment.
• The Agenda papers other than in nature of Unpublished Price Sensitive Information
(UPSI) are circulated well in advance as per statutory requirements and those in
nature of UPSI are circulated at least 24 hours in advance with the approval of the
Board.
• The Board business generally includes consideration of important corporate
actions and events including:
a) Quarterly and annual result announcements;
b) Oversight of the performance of the business;
c) Development and approval of overall business strategy;
d) Board succession planning;
e) Review of the functioning of the Committees and
f) Other strategic, transactional and governance matters as required under the
Companies Act, 2013, Listing Regulations and other applicable legislations.
• Majority of the meetings are conducted as physical meetings, however, at times
it may not be possible for each one to be physically present at all meetings.
Hence, we provide the facility of video conferencing/telepresence to the Board
members and invitees at various locations across the globe.
• All the meetings conducted through telepresence are recorded and stored as
per the statutory requirements. The Company Secretary records minutes of the
meetings of each Board and Committees. Draft minutes and signed minutes are
circulated to Board/Committee members within the timelines prescribed under
Secretarial Standards;
• The management team is invited to present the performance on key areas such
as the Company’s major business segments and their operations, subsidiary
performance and key functions from time to time.
Post Meeting summary/
Follow-up
5
• Post conclusion of each of the Board/Committee meeting, the Company Secretary
circulates the summary of the proceedings of all meetings along with the action
points, if any.
• Various decisions taken at Board/Committee meetings are promptly
communicated to the concerned departments/divisions.
• The matters arising from the previous meetings are taken up at the respective
forthcoming Board/Committee meeting.
214
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
Chairman and other Key Managerial Personnel (KMPs)
The Chairman of the Board encourages and promotes a culture where the Board along with its management works towards
ensuring that the long-term goals of the Company are in parity with that of its stakeholders. The Chairman being the leader of
the Board, facilitates effective communication among Directors and is entrusted with ensuring that the Board as a whole provides
effective governance to the Company.
The position of the Chairman of the Board and Chief Executive Officer (CEO) of the Company are held by separate individuals and
there is proper segregation of role, responsibilities and duties between them. Apart from this, the Company also has a separately
designated Chief Financial Officer and Company Secretary.
During the FY 2019, following were the changes in the position of Directors/Key Managerial Personnel (KMPs) of the Company:
1
2
3
4
5
Mr. Navin Agarwal was re-appointed as the Whole-Time Director for a period of 5 years w.e.f. August 1, 2018
to July 31, 2023
Mr. K. K. Kaura resigned from the post of Interim Chief Executive Officer from the close of business hours on
August 30, 2018
Mr. S. Venkatakrishnan was appointed as the Whole-Time Director and Chief Executive Officer of the Company
w.e.f. March 1, 2019 to August 31, 2021
Mr. Tarun Jain was re-appointed as a Non-Executive Director, by the Board at their meeting held on March 28,
2019 w.e.f. April 1, 2019 to March 31, 2020
Ms. Prerna Halwasiya was appointed as the Company Secretary & Compliance Officer of the Company w.e.f.
July 31, 2018 in place of Ms. Bhumika Sood who resigned w.e.f. June 16, 2018
Board & Executive Leadership Remuneration Policy
The key objective of the Remuneration Policy is to
ensure that competitive and fair awards are linked to key
deliverables and are also aligned with market practice and
shareholders’ expectations.
The NRC ensures that remuneration policies and practices
are designed to attract, retain and motivate the Executive
Directors and the senior management group, while focussing
on the delivery of the Group’s strategic and business
objectives. The Committee is also focused on aligning
the interests of the Executive Directors and the senior
management group with those of shareholders, to build a
sustainable performance culture.
The Executive Directors’ remuneration has two components:
fixed pay and annual variable pay including stock incentives
(performance linked incentive). The fixed component
is based upon the industry practice and benchmarks
considering the skill and 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 Executive Directors 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 Independent Directors during the year.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 215
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Remuneration paid or payable to Directors for the year ended March 31, 2019 and relationship with each other
Name of the Director
Executive Directors
Mr. Navin Agarwal(1)
Mr. Tarun Jain
Mr. S. Venkatakrishnan(2)
Mr. G. R. Arun Kumar
Total
Relationship
with other
Directors
Sitting Fees
Salary and
Perquisites
Provident and
Superannuation
Funds
Commission to Non-
Executive Directors /
performance incentive for
the Executive Directors^
Vedanta Limited
ESOS Scheme
(Grants till date)(3)
Total
None
None
None
None
- 235,167,304 12,053,782
59,855,112 307,076,198
-
- 179,693,717
-
-
-
-
40,235,919 219,929,636
463,630
-
-
-
- 45,620,802
2,689,824
14,683,392
62,994,018
265,410
460,481,823 14,743,606
114,774,423 589,999,852
-
Independent Non-Executive Directors
Mr. Aman Mehta
Mr. K. Venkataramanan
Ms. Lalita D. Gupte
Mr. Ravi Kant
Mr. U. K. Sinha
Total
None
None
None
None
None
1,100,000
650,000
1,100,000
1,150,000
900,000
4,900,000
Non-Independent Non-Executive Directors
-
7,500,000
8,600,000
7,500,000
8,600,000
-
7,500,000
8,150,000
7,500,000
8,650,000
7,500,000
8,400,000
37,500,000
42,400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ms. Priya Agarwal
Grand Total
None
600,000
7,500,000
8,100,000
5,500,000 460,481,823 14,743,606
159,774,423 640,499,852
-
-
Notes:
^The Annual Performance bonus to Executive Directors is for FY 2018 which is paid during FY 2019;
Additionally, the Company had paid an annual bonus of ` 12,508,755 for FY 2018 to Mr. Thomas Albanese who was the Whole-Time Director & Chief
Executive Officer of the Company till August 31, 2017.
Additionally, on account of delisting of Vedanta Resources Limited, UK , all the outstanding shares of Executive Directors were bought by Volcan under Cash
Offer Plan and the same has not been included above.
(1)
Sitting fees and commission paid to Mr. Navin Agrawal from HZL was ` 2,00,000 and ` 1,500,000 respectively during the FY 2019.
In addition to the above, Mr. Navin Agarwal received remuneration from Vedanta Resources Limited, UK, the Holding Company amounting to GBP
85,000 (` 77.97 lakhs) for the financial year ending March 31, 2019;
Mr. Srinivasan Venkatakrishnan is not paid any remuneration from the Company. The entire remuneration will be received from the Holding Company i.e.
Vedanta Resources Limited. The remuneration received by Mr. Venkatakrishnan through Vedanta Resources Limited for the period from March 1, 2019 till
March 31, 2019 is `102.31 Lacs.
Additionally, Mr. Venkatakrishnan received an amount of GBP 1,467,528 (` 1,346 lakhs) from Vedanta Resources Limited, UK in lieu of Anglo Gold
Ashanti bonus & LTIP as per agreed terms of appointment.
(2)
(3) ESOS Scheme Grants:
• The ESOS 2016 options vests after three years from date of grant i.e. on December 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.
• The ESOS 2018 & Cash Plan 2018 options/units will vest/ be exercise after three years from date of grant i.e. on November 1, 2021, based on
achievement of performance conditions.
We hereby confirm that:
• The total managerial remuneration payable in FY 2019 does not exceed 11% of the net profits of the Company;
• The total remuneration received by Whole-Time Directors and Independent Directors of the Company does not exceed 10%
and 1% of the Net Profits of the Company respectively;
• No single Non-Executive Director receives remuneration exceeding 50% of the total annual remuneration payable to all
Non-Executive Directors;
• Mr. Navin Agarwal, Executive Chairman and member of Promoter Group does not receive remuneration in excess of `5 crores
or 2.5% of the Net Profits of the Company, whichever is higher.
Board Committees
The Board has established various committees to support it in exercising its authority, including monitoring the performance of
the Company and to gain assurance that progress is being made towards the fulfilment of the objectives of the Company and its
stakeholders.
The Board is assisted by its principal Committees each of which are responsible for reviewing and dealing with matters within
their own terms of reference approved by the Board, which are updated from time to time with reference to best corporate
governance practices.
The Company Secretary officiates as the Secretary of these Committees. The minutes of the meetings of all the Committees are
placed before the Board for its review and noting.
216
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Composition of Committees:
All the Committees have optimum composition pursuant to the Listing Regulations.
Board
Audit
Committee
Nomination &
Remuneration
Committee
Stakeholder
Relationship
Committee
Corporate
Social
Responsibility
Committee
Committee
of Directors
Finance
Standing
Committee
of Director
Risk
Management
Committee(1)(2)
Sustainability
Committee(3)(4)
Name of Director
Mr. Navin Agarwal
Mr. Aman Mehta
Mr. K. Venkataramanan
Ms. Lalita D. Gupte
Mr. Ravi Kant
Mr. U. K. Sinha
Ms. Priya Agarwal
Mr. G. R. Arun Kumar
Mr. S. Venkatakrishnan(5)
Mr. Tarun Jain
Member
Chairperson
(1)
(2)
For Risk Management Committee, Chairman of each meeting is appointed at the start of each meeting pursuant to Regulation 21(3) of the Listing Regulations;
In addition to the above board members, Mr. Dilip Golani, Head Management Assurance (MAS) is also a member of the Risk Management Committee
and Mr. Deodatta Padgaonkar, SVP MAS is the Risk Officer;
(3) The Board at its meeting held on January 31, 2019, constituted the Sustainability Committee effective from April 1, 2019;
(4)
In addition to the above board members, Mr. Sunil Duggal, CEO Base Metals and Ms. Deshnee Naidoo, CEO Zinc International are members of the
Sustainability Committee;
(5) Mr. S. Venkatakrishnan has been appointed w.e.f. March 1, 2019
Board and Committee Meetings for FY 2019:
Meeting
Board
Audit Committee
Apr-Jun
April 2, 2018
May 3, 2018
June 26, 2018
May 2, 2018
Nomination & Remuneration Committee
Stakeholder Relationship Committee
-
-
Jul-Sept
July 13, 2018
July 31, 2018
Oct-Dec
October 31, 2018
December 1, 2018
July 31, 2018
July 13, 2018
July 31, 2018
-
October 30, 2018
December 1, 2018
October 31, 2018
October 31, 2018
Corporate Social Responsibility Committee
May 3, 2018
-
-
Jan-Mar
January 31, 2019
March 6, 2019
March 28, 2019
January 30, 2019
March 28, 2019
January 31, 2019
March 28, 2019
-
March 28, 2019
Risk Management Committee
April 12, 2018
August 27, 2018 October 15, 2018
February 21, 2019
• The Board approved eleven matters by passing resolution by circulation
• The Audit Committee approved five matters by passing resolution by circulation
• The maximum interval between any two Board and Audit Committee meetings did not exceed 120 days, as prescribed in the Companies Act, 2013 and
Listing Regulations
Attendance for Board & Committee Meetings held during FY 2019:
Name of Director
Mr. Navin Agarwal
Mr. Aman Mehta
Mr. K. Venkataramanan
Ms. Lalita D. Gupte
Mr. Ravi Kant
Mr. U. K. Sinha
Ms. Priya Agarwal
Mr. G. R. Arun Kumar
Mr. S. Venkatakrishnan(2)
Mr. Tarun Jain(3)
Board
Meeting
Audit
Committee
NRC
SRC
CSR
RMC(1)
Whether attended AGM
on August 24, 2018
(Attended/
Entitled)
(Attended/
Entitled)
(Attended/
Entitled)
(Attended/
Entitled)
(Attended/
Entitled)
(Attended/
Entitled)
Average attendance %
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
NA
Yes
10/10
9/10
10/10
10/10
10/10
9/10
10/10
10/10
2/2
10/10
-
6/6
-
6/6
6/6
6/6
-
-
-
-
5/5
5/5
-
5/5
5/5
-
-
-
-
-
-
-
1/1
1/1
-
1/1
-
1/1
NA
1/1
-
2/2
2/2
-
2/2
2/2
2/2
-
1/1
2/2
-
-
-
-
-
-
-
4/4
NA
4/4
100
98
100
100
100
98
100
100
100
100
(1) Mr. Dilip Golani attended all four meetings of RMC;
(2)
Mr. S. Venkatakrishnan has been appointed w.e.f. March 1, 2019 on the Board and on Corporate Social Responsibility Committee, Stakeholder
Relationship Committee and Risk Management Committee;
(3) Mr. Tarun Jain has been re-appointed as a Non-Executive Director w.e.f. April 1, 2019.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 217
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Report on Corporate Governance continued
AUDIT COMMITTEE
The key responsibilities of the Audit Committee are to assist
the Board in fulfilling its oversight responsibilities in relation
to: financial reporting; the effectiveness of the system
of risk management and robustness of internal financial
controls and risk management framework including cyber
security, adequacy and effectiveness of the Company’s
legal, regulatory and ethical compliance & governance
programmes, monitoring the qualifications, expertise,
resources and independence of both the internal and external
auditors; and assessing the auditors’ performance and
effectiveness each year.
The Committee relies on the expertise and knowledge of
the management, the Internal Auditors and the Statutory
Auditor, in carrying out its oversight responsibilities. It also
uses external expertise, if required. The management is
responsible for the preparation, presentation and integrity of
the Company’s financial statements including consolidated
statements, accounting and financial reporting principles.
The management is also responsible for internal control
over financial reporting and all procedures are designed to
ensure compliance with accounting standards, applicable
laws and regulations as well as for objectively reviewing
and evaluating the adequacy, effectiveness and quality of
the Company’s system of internal controls. M/s. SR Batliboi
& Co. LLP, Chartered Accountants (FRN: 301003E) the
Company’s Statutory Auditor, is responsible for performing an
independent audit of the Financial Statements and expressing
an opinion on the conformity of those financial statements.
The Audit Committee covers a variety of topics in its meetings.
These include both standing items that the Committee
considers as a matter of course, typically in relation to the
quarterly unaudited financial statements, control issues,
accounting policies and judgements and reporting matters,
and a range of topics relevant to Vedanta’s control framework.
The Committee invites the Chief Executive Officer, the Chief
Financial Officer, Group Assurance Head, and the external
auditor to attend each meeting. The Business and Operation
Heads are also invited to the meetings, as and when required.
The Committee also meets separately with the external
auditor without members of management to sought the
auditors judgement about the quality and applicability
of the accounting principles, the reasonableness of
significant judgement and adequacy of disclosures in
financial statements.
The Audit Committee reviews on a quarterly basis the
confirmation of the Independence made by the Auditors, and
also approves of the fees paid to the Auditors by the Company,
or any other company in the Vedanta Group as per the Policy
for approval of Audit/Non-Audit Services to be rendered
by the Auditors.
The Committee comprises of four Independent Directors
whose names and biographies are set out in the Board and
Committees section of this Annual Report. The Committee
fulfils the requirements as specified under the provisions
of the Companies Act, 2013, Listing Regulations and NYSE
Guidelines w.r.t composition, independence & financial
expertise of its members.
The schedule of Committee meetings held in FY 2019 along
with its members’ attendance records are disclosed in the
earlier sections of this Report.
As part of the Board’s annual evaluation of its effectiveness
and that of its Committees, as described later in the report, the
Committee assessed its own effectiveness. The members of
the Audit Committee agreed that its overall performance had
been effective during the year.
Review of Financial Results for FY 2019
The Committee reviewed the Standalone & Consolidated
Financial Statements for FY 2019 and based on this review and
discussions with management, the Committee was satisfied
that the Financial Statements were prepared in accordance
with applicable Accounting Standards and fairly present
the Group’s financial position and results for the year ended
March 31, 2019. The Committee therefore recommended the
Financial Statements for the year ended March 31, 2019 for
approval of the Board.
The Board accepted all the recommendations made by the
Audit Committee in FY 2019.
THE UTILISATION OF AUDIT COMMITTEE’S TIME
ALONG WITH ITS MAJOR RESPONSIBILITIES IS
DETAILED BELOW:
Oversight of Financial reporting
Internal Audit, Internal Financial
Control and Risk Management
Auditors
Governance
(%)
40
40
10
10
218
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS FINANCIAL STATEMENTS
Oversight of Financial
Reporting
• Overseeing the Company’s financial reporting process and disclosure of its financial
information to ensure that the financial statements are true, fair, sufficient and credible;
• Discuss and review, with the management and auditors, the annual/quarterly financial
statements before submission to the Board;
• Discuss and review earnings press releases and the financial information and guidance
provided to analysts and ratings agencies;
• Review of key significant issues, tax & legal reports and management’s report;
• Review of management’s analysis of significant issues in financial reporting and
judgments made in preparing the financial statements;
• Discuss with the Management regarding pending technical and regulatory matters
that could affect the financial statements, and updates on management’s plans to
implement new technical or regulatory guidelines;
• Review of off-balance-sheet structures, if any;
• Review of draft limited review/audit reports and qualifications, if any, therein;
• Discuss and review the Form 20 F & Japanese Filings.
Auditors
their fees and reviewing their audit reports;
• Appointment of Statutory, Internal, Secretarial, Cost & Tax Auditors, recommending
• Review of the independence of the Statutory Auditor and the provision of audit/
non-audit services including audit/non-audit fees paid to the statutory auditor;
• Independent meetings with Statutory Auditors.
Internal Audit, Internal
Financial Controls, Risk
Management
• Review of internal audit observations and monitoring of implementation of any
corrective actions identified;
• Reviewing the internal financial control framework;
• Review of the performance of the internal audit function & internal audit plan;
• Reviewing the risk management framework, cyber security, risk profile, significant risks,
risk matrix and resulting action plans;
• Review of the significant audit risks with the Statutory Auditor during interim review and
year-end audit;
• Consideration of statutory audit findings and review of significant issues raised;
• Reviewing related party transactions;
• Management discussion and analysis of financial condition and results of operations.
Governance
• Reviewing minutes summary reports from subsidiary companies audit committees;
• Reviewing intercorporate loans, advances, guarantees;
• Reviewing ethics (whistle blower, sexual harassment, Insider Trading) and statutory
compliances;
• Review of its own charter and processes;
• Notices received from statutory authorities and the management’s response;
• Regulatory updates;
• Reviewing feedback from the Audit Committee’s performance evaluation.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 219
Report on Corporate Governance continued
NOMINATION AND REMUNERATION COMMITTEE
The Nomination & Remuneration Committee (NRC) comprises
three Independent Directors and the Executive Chairman
whose names and biographies are set out in the Board and
Committees section of this Annual Report. The Committee
fulfils the composition requirement as specified under
the provisions of the Companies Act, 2013 and Listing
Regulations. In the event of a conflict of interest, the Executive
Chairman abstains from the discussions and other members
of the NRC participate and vote. Other Directors, members
of the senior management team and external advisers may
attend meetings at the invitation of the Committee, as
appropriate. The Chairman of the NRC provides an update to
the Board in respect of each of its meetings.
The schedule of NRC meetings held in FY 2019 along with
its members’ attendance records are disclosed in the earlier
sections of this Report.
As part of the Board’s annual evaluation of its effectiveness
and that of its Committees, as described later in the report,
the NRC assessed its own effectiveness. The members of the
NRC agreed that its overall performance had been effective
during the year.
The Board accepted all the recommendations made by the
Committee in FY 2019.
The NRC is responsible for making recommendations to the
Board on the structure, size and composition of the Board,
ensuring that the appropriate mix of skills, experience, diversity
and independence is present on the Board for it to function
effectively. The NRC also leads the process for new Board
appointments, advises the Board on succession planning
arrangements and oversees the development of management
talent within the Group.
Another key objective of the Committee is to ensure that
competitive and fair awards are linked to key deliverables
and are also aligned with market practice and shareholders’
expectations. The Committee ensures that remuneration
policies and practices are designed to attract, retain and
motivate the Executive Directors and the senior management
group, while focusing on the delivery of the Group’s strategic
and business objectives. The Committee is also focused on
aligning the interests of the Executive Directors and the senior
management group with those of shareholders, to build a
sustainable performance culture. When setting remuneration
for the Executive Directors, the Committee takes into account
the business performance, developments in the natural
resources sector and, considering that the majority of the
Group’s operations are based in India, similar information
for high-performing Indian companies. The Committee also
carries out the entire process of Board Evaluation.
THE UTILISATION OF THE COMMITTEE’S TIME ALONG
WITH ITS MAJOR RESPONSIBILITIES IS DETAILED
BELOW:
Board Composition and Nomination
Compensation
Evaluation
Succession Planning & Governance
(%)
40
25
20
15
220
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS INTEGRATED REPORT
MANAGEMENT REVIEW STATUTORY REPORTS FINANCIAL STATEMENTS
Board Composition
and Nomination
Compensation
Evaluation of the
Board, its Committees
and Individual
Directors
Succession Planning &
Governance
• Review and recommend the structure, size and composition (including the skills,
knowledge, experience and diversity) of the Board and its Committees;
• Formulate the criteria/policy for appointment of Directors, Key Managerial Personnel
(KMPs) and Senior Management (as defined by the NRC) in accordance with identified
criteria;
• Review and appoint shortlisted candidates as Directors, KMPs and Senior Management
(including evaluation of incumbent directors for potential re-nomination) and make
recommendations to the Board;
• Evaluate the balance of skills, knowledge, experience and diversity on the Board for
description of the role and capabilities, required for an appointment;
• Formulate and recommend to the Board the criteria for determining qualifications,
positive attributes and independence of a Director.
• Recommend to the Board a policy relating to the remuneration of Directors (both
Executive and Non-Executive Directors), KMP and Senior Management Personnel;
• Ensuring that the level and composition of remuneration is reasonable and sufficient
to attract, retain and motivate Directors of the quality required to run the Company
successfully;
• Ensuring relationship of remuneration to performance is clear and meets appropriate
performance benchmarks;
• Remuneration to Directors, KMP and senior management involves a balance between
fixed and incentive pay reflecting short and long-term performance objectives
appropriate to the working of the Company and its goals;
• Determine remuneration based on the Company’s financial position, trends and
practices on remuneration prevailing in the industry as considered appropriate by the
NRC;
• Review of the Company’s Share Based Employee Benefit Scheme(s), if any, including
overseeing the administration of the Scheme(s), formulating the necessary terms and
conditions for such Scheme(s) like quantum of options/ rights to be granted, terms of
vesting, grant options/ rights to eligible employees, in consultation with management;
and allotment of shares/ other securities when options/ rights are exercised etc.
and recommend changes as may be necessary.
• To develop, subject to approval by the Board, a process for an annual self-evaluation
of the performance of the Board, its Committees and the individual Directors in the
governance of the Company and to coordinate and oversee this annual self-evaluation;
• To formulate a criterion for evaluation of Independent Directors and the Board and carry
out evaluation of every Director’s performance and present the results to the Board;
• To review the performance of all the Executive Directors, on the basis of detailed
performance parameters set for each of the Executive Directors at the beginning of the
year and present the results to the Board;
• Action report on suggestions made on evaluation;
• To maintain regular contact with the leadership of the Company. This should include
interaction with the Company’s Leadership Institute, review of data from the employee
survey and regular review of the results of the annual leadership evaluation process.
• Review succession planning for Executive and Non-Executive Directors and other Senior
Management;
• Establishing policies and procedures to assess the requirements for induction of new
members to the Board;
• To maintain regular interaction and collaborate with the leadership including the HR
team to review the overall HR vision and people development strategy of the Company;
• To review and reassess the adequacy of the NRC’s charter as required and recommend
changes to the Board;
• To develop and recommend a policy on Board diversity.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 221
Report on Corporate Governance continued
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
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 part of the Board’s annual evaluation of its effectiveness
and that of its Committees, as described later in the report, the
CSR Committee assessed its own effectiveness. The members
of the CSR Committee agreed that its overall performance had
been effective during the year.
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 organisations,
corporates, civil societies & community-based organisations to
carry our durable and meaningful initiatives.
The CSR Committee was setup to formulate and monitor
the CSR Policy of the Company along with recommending
the CSR Budget.
The schedule of CSR meetings held in FY 2019 along with
its members’ attendance records are disclosed in the earlier
sections of this Report.
The Board accepted all the recommendations made by the
Committee in FY 2019.
THE UTILISATION OF THE COMMITTEE’S TIME ALONG
WITH ITS MAJOR RESPONSIBILITIES IS DETAILED BELOW:-
CSR Activities
CSR Budget
CSR Policy
(%)
45
40
15
CSR POLICY
• To formulate and recommend to the Board the CSR Policy indicating the activities to be undertaken by the
Company pursuant to the provisions of Companies Act, 2013 and the rules made thereunder;
• To review the CSR Policy and associated frameworks, processes and practices.
CSR ACTIVITIES
• To identify the areas of CSR activities and projects and to ensure that the Company is taking the appropriate
measures to undertake and implement CSR projects successfully;
• To assess the performance and impact of CSR activities of the Company;
• To evaluate CSR communication plans.
CSR BUDGET
• To decide and recommend to the Board the amount of expenditure to be incurred on CSR activities;
• To evaluate and monitor actual spent towards CSR activities is in compliance with the Companies Act, 2013.
STAKEHOLDERS’ RELATIONSHIP COMMITTEE
The Company recognises the worth of sustaining an ongoing
relation with the Company’s stakeholders to ensure a mutual
understanding of the Company’s strategy, performance
and governance.
SRC agreed that its overall performance had been effective
during the year.
The Board accepted all the recommendations made by the
Committee in FY 2019.
The Stakeholder Relationship Committee (SRC) assists the
Company and its Board in maintaining strong and long
term relationships with all its shareholders. The SRC mainly
oversees and reviews the timely redressal of all the Security
holders grievance; ways to enhance shareholder experience;
performance of Registrar & Transfer Agent; shareholding
movement etc.
The details of SRC composition and meetings are given in the
earlier section of this report. The SRC is chaired by Ms. Lalita D.
Gupte, Non-Executive Independent Director.
As part of the Board’s annual evaluation of its effectiveness
and that of its Committees, as described earlier in the report,
the SRC assessed its own effectiveness. The members of the
222
THE UTILISATION OF THE COMMITTEE’S TIME ALONG
WITH ITS MAJOR RESPONSIBILITIES IS DETAILED BELOW:
Enhancing Shareholder experience
Shareholder Grievances
Shareholding Pattern
(%)
45
40
15
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Shareholder
grievances
Enhancing shareholder
experience/services
• Review and timely resolving the grievances of the security holders related to issue,
allotment, transfer/transmission, dematerialisation, rematerialisation etc. of shares and/
or other securities of the Company;
• Review and timely redressal of all the security holders grievance related to non-receipt
of information demanded if any, non-receipt of annual report, non-receipt of declared
dividend, issue of new/duplicate share certificates, general meeting etc.;
• Review from time to time the shares and dividend that are required to be transferred to
the IEPF Authority;
• Review & closure of all Investor cases.
• Review of measures taken for effective exercise of voting rights by shareholders;
• Review of the various measures and initiatives taken by the Company for reducing the
quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/
annual reports/ statutory notices by the shareholders of the Company;
• Initiatives for registration of e-mail IDs, PAN & Bank mandates and demat of shares;
• Review reports on shareholder satisfaction surveys, if any;
• Oversight of the performance and services standards of various services being
rendered of/by Registrars & Transfer Agent of the Company.
Shareholding pattern
• Review shareholding distribution;
• Review movement in shareholding pattern;
• Comparative details on demat and physical holding.
Investor Complaints
Company’s Registrar & Transfer Agent, Karvy Fintech Private Limited (erstwhile Karvy Computershare Private Limited) (Karvy/RTA)
entertains and resolves investor grievances in consultation with the Compliance Officer. All grievances can be addressed either
to Karvy or to the Company directly. An update on the status of complaints is quarterly reported to the Board and is also filed with
stock exchanges.
The details of shareholders’ complaints during FY 2019
S. No. Nature of complaints/letters and correspondence
Received
Replied
Closing Balance
Complaints received through Stock Exchanges, SEBI and Ministry of Corporate Affairs
1
2
3
4
Non-receipt of shares
Non-receipt of dividends/debenture redemption
Non-receipt of Annual Reports
Miscellaneous
Other Correspondence from Shareholders
1
Letters and correspondence from shareholders
Total
30
38
8
22
30
38
8
22
19,329
19,427
19,329
19,427
0
0
0
0
0
0
Note: The Company received Nil complaints w.r.t. Non-Convertible Debentures and Redeemable Preference Shares
RISK MANAGEMENT COMMITTEE
The Company has a duly constituted Risk Management
Committee (RMC) which supports the Audit Committee
and Board in fulfilling its Corporate Governance oversight
responsibilities with regard to identification, evaluation and
mitigation of risks impacting the business.
management programme (including for cybersecurity) and the
control systems built in.
The constitution of the Committee is in compliance with the
requirements of Listing Regulations. The details of composition
have been provided in the earlier section of this report.
The Board assumes the responsibility to monitor the
Company’s risk management by carrying out a periodic review
of effectiveness of the risk management framework. The Audit
Committee aids the Board in this process by assessment of the
framework, reviewing changes in risks, review of principal risks,
control measures and remedial actions. The Audit Committee
is supported by the Group Risk Management Committee in
evaluating the design and operating effectiveness of our risk
Risk Management Committee is mainly entrusted with the
following responsibilities:
1.
Have oversight over the effective implementation of the
risk management framework across various businesses;
2.
To ensure that the organisation is taking appropriate
measures to achieve prudent balance between risk and
reward in both ongoing and new business activities;
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 223
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
The committee is broadly entrusted with the following:
1.
2.
3.
Review and approve all policies related to the financial
matters of the Company;
Review and approve Inter-Corporate Loans, Guarantees
and Investments;
Authorisation for account operations including bank
accounts, demat accounts, trading accounts etc.;
4. To consider and approve treasury related proposals;
5. Approving security related proposals.
The composition of the Committee is detailed in the earlier
section of this report. The FSC meets on a requirement basis.
During FY 2019, the committee met eight times on May 30,
2018; June 4, 2018; July 23, 2018; September 19, 2018;
October 31, 2018; November 19, 2018; December 18, 2018;
and March 7, 2019.
Committee of Directors
The Committee of Directors (COD) supports the Board
by considering, reviewing and approving all borrowing
related proposals, within the overall limits approved by the
Board from time to time. The COD enables seamless flow
of procedures and assists the Board by catering to various
routine requirements. The Committee meets as and when
deemed necessary.
The details of composition of the COD is given in the earlier
section to this report. The Committee met three times
during the FY2019 on June 27, 2018; July 3, 2018 and
March 18, 2019.
Share & Debenture Transfer Committee
The Committee consists of four members, Mr. G. R.
Arun Kumar, Whole-Time Director & Chief Financial Officer,
Ms. Pooja Yadava, GM Legal, Mr. Anup Agarwal, SVP Corporate
Finance and Mr. Jagdeep Singh, Senior Corporate Counsel.
During the year the Committee met twenty times.
The role of Share & Debenture Transfer Committee primarily
includes the following:
• Allotment of shares, debentures or any other securities;
• Approval of transfer, transmission, deletion and transposition
of shares, debentures or any other securities.
Executive Committee
The Executive Committee (EXCO) supports in the day-to-
day running of the Company and meets on a monthly basis.
It is entrusted with executing the strategy adopted by the
Board, allocating resources in line with delegated authorities,
managing risk and monitoring the operational and financial
performance of the Company. Authority is delegated by the
Executive Committee to the respective Chief Executive Officer
of each of the businesses. The Group Chief Executive Officer
keeps the Board informed of the EXCO’s activities through his
standing reports to the Board.
3.
4.
Annually review the risk management policy & risk appetite
including cyber security and recommends necessary
changes to the Audit Committee/Board, if any;
To evaluate significant & critical risk exposures and assess
management’s action to mitigate or manage the exposures
in a timely manner.
A separate section on principal risks and uncertainties is
covered in the Management Discussions & Analysis Report.
SUSTAINABILITY COMMITTEE
As a Group we have sought to embed a standardised,
high-performance sustainability culture across all our
businesses. Our emphasis remains on our philosophy of ‘Zero
Harm, Zero Waste and Zero Discharge’. Sustainability being
one of our core values and pillar, means giving utmost priority
to health and safety, being environmentally responsible and
supporting all our communities. The wellbeing and security of
our people, the community and the environment is considered
in each of the things that we do.
In our endeavour to follow the global best practices, the Board
at its meeting held on January 31, 2019 has constituted a
Sustainability Committee effective April 1, 2019 to support the
Board for the below:
1.
2.
To oversee the Company’s sustainability performance and
the adequacy of the Company’s sustainability framework;
Advise the Board on sustainability policies and
management system, clearly setting out the commitments
of the Company to manage matters of sustainable
development effectively;
3. Ensure governance responsibilities related to sustainability;
4.
5.
Outline initiatives required to institutionalise a sustainability
culture through involvement of the employees at all levels;
Advise the Board to enable it to discharge its
responsibilities, having regard to the law and the expected
international standards of sustainability & governance.
The details of composition have been provided in the earlier
section of this report.
OTHER COMMITTEES
The Board has constituted few other committees, for ensuring
smooth functioning of the Board. This enables and ensures
that prompt and timely decisions are taken on the matters
important for the Company and therefore delegated to the
respective Committees. Minutes of each Committee meetings
are placed before the Board for its noting. The Board also
formulates several project specific sub-committees from time
to time which ensures speedy implementation and execution
of the projects. The Board is updated on each of the meetings
of sub-committees as well.
As on March 31, 2019, details of other committees are
given below:
Finance Standing Committee of Directors
The Finance Standing Committee (FSC) supports the Board
by considering and approving matters relating to finance,
investment, banking, treasury etc. within the overall limits
approved by the Board.
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS GENERAL BODY MEETINGS
Annual General Meetings
The details of the last three years Annual General Meetings / Court Convened Meeting are as follows:
Year
Location
Date & Time
Special Resolutions passed
Weblink
51st Annual General Meeting
2015-16
Main Hall of Institute
Menezes Braganza,
Panaji, Goa
June 29, 2016 at 11:00 a.m.
• Offer or invitation for subscription of
Non-Convertible Debentures up to
` 20,000 crore on a Private Placement
basis.
• Waive the excess remuneration paid to
Mr. Navin Agarwal for the FY 2014.
Court Convened Meeting
2016-17
Hotel Mandovi,
D. B. Marg, Panaji,
Goa
52nd Annual General Meeting
2016-17
Rangsharda Auditorium,
K.C. Marg, Bandra
Reclamation, Bandra
(West), Mumbai
September 8, 2016 at:
• For approval of the amalgamation
embodied in the scheme of arrangement
of Cairn India Limited with Vedanta
Limited and their respective shareholders
and creditors.
• 10:00 a.m. for the Equity
Shareholders of the Company
• 2:00p.m. for the Secured
Creditors of the Company
• 4:00 p.m. for the Unsecured
Creditors of the Company
July 14, 2017 at 10.30 a.m.
Notice
Outcome
Notice
Outcome
• Appointment of Mr. G. R. Arun Kumar as
Whole-Time Director and Chief Financial
Officer (CFO).
Notice
Outcome
• Re-appointment of Mr. Thomas Albanese
as Whole-Time Director and Chief
Executive Officer (CEO).
• Offer or invitation for subscription of
Non-Convertible Debentures up to
` 20,000 crore on a Private Placement
basis.
• Waive the excess remuneration paid to
Mr. Navin Agarwal for the FY 2014..
53rd Annual General Meeting
2017-18
Rangsharda Auditorium,
K.C. Marg, Bandra
Reclamation, Bandra
(West), Mumbai
August 24, 2018 at 10:30 a.m.
1.
2.
3.
Notice
Outcome
Re-appointment of Ms. Lalita D. Gupte as
an Independent Director for a second and
final term.
Re-appointment of Mr. Ravi Kant as an
Independent Director for a second and
final term.
Offer or invitation for subscription of Non-
Convertible Debenture up to ` 20,000
crore on Private Placement basis.
Voting Levels
The voting levels at the Annual General Meeting have increased in 2018, accounting to ~80% of the listed capital of the Company.
All resolutions were passed at the meeting with ~98% votes in favour.
Postal Ballot
There were no resolutions passed during the FY 2019 through postal ballot.
Further, there is no immediate proposal for passing any resolution through postal ballot.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 225
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
SHAREHOLDERS
Means of Communication
FINANCIAL RESULTS
• The quarterly/ half-yearly/ annual results along with audit/ limited review report, press release and investor
presentation is filed with the stock exchanges immediately after the approval of the Board;
• Within 48 hours of the conclusion of the meeting, the results are published in at least one prominent national
and one regional newspaper having wide circulation vis-à-vis. Business Standard, Financial Express, Economic
Times and Maharashtra Times;
• The Company also sends its quarterly financial results to shareholders whose e-mail IDs are registered with the
Registrar & Transfer Agent;
• Financial results are also displayed on the Company’s website and can be accessed at
https://www.vedantalimited.com.
NEWS RELEASES
• The Company regularly keeps the stock exchanges updated on any of the developments/events and the same
are simultaneously displayed on the Company’s website as well;
• All the releases can be accessed on the website of the Company at https://www.vedantalimited.com.
PRESENTATIONS MADE TO INSTITUTIONAL INVESTORS AND ANALYSTS
• The schedule of analyst / investor meets and the presentations for the same are filed with the stock
exchanges and simultaneously uploaded on the website of the Company at https://www.vedantalimited.com;
• The Company periodically sends an Investor Brief to its shareholders detailing major developments in the
Company. The same is also filed with the stock exchanges.
WEBSITE
• The Company has a corporate website https://www.vedantalimited.com under which there is a dedicated
section on ‘Investor Relations’ which contains all the information for the investors like financial results, policies
& codes, stock exchange filings, press releases, annual reports, SEC Filings etc.
ANNUAL REPORT & FORM 20F
• The Company sends soft copies of Annual Reports to those shareholders whose email IDs are registered with
the Company, and hard copies are sent to those shareholders whose email IDs are not registered. The Form
20F filed with SEC is also available on the website of the Company.
CHAIRMAN COMMUNIQUE
• Each of the shareholders at the AGM are given copy of the Chairman’s Speech. The copies are printed both in
Marathi and in English;
• The speech is also placed on the website of the Company and published in the newspaper for better
circulation.
APPEAL TO SHAREHOLDERS
• Regular reminders were sent to shareholders for updating their e-mail IDs, PAN and Bank mandate with the
Company to ensure faster communication and credit of amounts. The shareholders can update their details
with the Company directly on its website https://www.vedantalimited.com;
• Reminders are sent to shareholders to encourage them to timely claim their unclaimed dividend and shares
before the same is transferred to the IEPF Account;
• Shareholders are also encouraged to open Demat accounts to eliminate bad delivery, save stamp duty on
transfers, ensure faster settlement, ease portfolio management and provide ‘on-line’ access through internet.
The Company had provided exclusive facility to its shareholders to open their Demat accounts with nil annual
maintenance charges for first year.
226
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS GREEN INITIATIVES BY THE COMPANY:
In all the communications sent out by the Company to its shareholders it appeals them to support the
Green initiative by:
1.
2.
3.
4.
Registering their e-mail IDs with the Company through which all the communications, annual reports etc.
can be promptly sent to the shareholders on real time basis;
Registering their Bank mandate with the Company which would enable direct credit of any dividends/
amounts to shareholders and can avoid printing of warrants;
Converting physical holdings in Dematerialised holding so that all the transactions can be undertaken
online without printing of physical documents;
Voting through remote e-voting facility provided by the Company. The Company is also offering insta poll
facility to its shareholders present at the AGM which would eliminate printing of ballot papers.
Correspondence Details
All the Share Transfer and Dividend Payment Requests and Investors Related
queries, the shareholders can directly contact our Registrar and Transfer Agent
Karvy Fintech Private Limited (erstwhile Karvy
Computershare Private Limited)
Unit: Vedanta 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
E-mail: einward.ris@karvy.com
The Shareholders can reach out to the designated persons of any department in case of any query for the matters
enumerated below:
Company Secretary and Compliance Officer for queries related to
Corporate Governance and Secretarial matters:
Queries and Update related to Financial Statement of the Company:
Corporate Communication related matters of the Company:
Sustainability Related Matters:
Queries and update on ADS issued by the Company:
Queries related to Debenture issued by the Company:
Ms. Prerna Halwasiya
Company Secretary & Compliance Officer
Tel.: +91 124 4593000
E-mail : comp.sect@vedanta.co.in
Ms. Rashmi Mohanty
Group Head Treasury & Director – Investor Relations
Tel : +91 124 459 3000
E-mail : vedantaltd.ir@vedanta.co.in
Mr. Arun Arora
Head, Group Communications
Tel.: +91 124 459 3000
E-mail : gc@vedanta.co.in
Mr. Phillip Turner
Group Head HSE
Tel.: +91 124 459 3000
E-mail: sustainability@vedanta.co.in
Overseas Custodian for ADS:
Citi- Depositary Receipt Services
388 Greenwich Street, 6th Floor, New York, NY 10013
Tel.: 212 816 6839
Website: www.citi.com/dr
Indian Custodian for ADS:
Citibank N.A. Custody Services
FIFC- 11th Floor, G Block
Plot C-54 and C-55, BKC,
Bandra (East), Mumbai – 400 098
Debenture Trustee:
Axis Trustee Services Limited
2nd Floor, Wadia International Centre, Pandurang Budhkar
Marg, Worli, Mumbai - 400 025
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 227
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
ANNUAL GENERAL MEETING FOR FY 2019
DATE & TIME
Thursday, July 11, 2019, 10:30 a.m. IST.
VENUE
Rangsharda Auditorium, K.C. Marg, Bandra Reclamation, Bandra (West), Mumbai – 400 050.
WEB CHECK-IN
To facilitate smooth and faster registration/entry at the AGM, the Company has also provided a web check-in
facility, which would help the members enter the AGM hall expeditiously.
WEBCAST
Your Company is pleased to provide the facility of live webcast of proceedings of AGM. Members who are
entitled to participate in the AGM can view the proceedings of AGM by logging on the e-voting website of Karvy
at https://evoting.karvy.com/ using their secure login credentials.
ONLINE QUERY PORTAL
The Company is pleased to inform that a new Online Query Module is provided to enable the members to seek
informations/clarifications pertaining to this report in advance. Members can post their queries related to this
Annual Report by using their secure login credentials on the e-voting website of Karvy at
https://evoting.karvy.com.
INSTA POLL FACILITY
• The shareholders present at AGM who have not cast their votes through remote e-voting facility can instantly
cast their votes through the insta poll facility being provided at the AGM.
• This would enable faster voting without printing of ballot papers and would ensure faster calculation of results.
KIOSK FOR OPENING DEMAT ACCOUNT
• Facility to open a demat account will also be provided by the Company at the AGM.
• Annual maintenance charges for the first year for Vedanta shareholders would be waived off.
Financial Year
The Financial Year of Company commences from April 1 and concludes on March 31 of each year. Each quarter the Company
reviewed and approved its financials. The previous and tentative dates for approval of the financials are as follows:
S. No. Results for the period ended
1
2
3
4
First Quarter
Second Quarter and Half Year Ended
Third Quarter
Fourth Quarter and Year Ended
FY 2019
July 31, 2018
Tentative Dates for FY 2020
End of July 2019
October 31, 2018
End of October 2019
January 31, 2019
End of January 2020
May 7, 2019
End of April 2020
Dividend
For the period under review, the Company has declared and paid dividends as detailed below:
Date of Board Meeting
Type of Dividend
Amount of Dividend
Record Date
Equity Shares
October 31, 2018
First Interim Dividend
March 6, 2019
Second Interim Dividend
`17 per share
`1.85 per share
Saturday, November 10, 2018
Thursday, March 14, 2019
Preference Shares
October 10, 2018
Redemption and Dividend as per terms
of issuance
`0.75 per share
(on pro rata basis)
Monday, October 22, 2018
The payments of the above mentioned dividends were made within the statutory timelines.
Further, the Board has not recommended any final dividend.
228
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Listing Details
Particular
Indian Stock Exchange
BSE Limited (BSE)
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001
National Stock Exchange of India Limited (NSE)
Exchange Plaza, Plot No. C/1, G-Block, Bandra-Kurla Complex,
Bandra (East), Mumbai - 400 051
Scrip Code
ISIN code
500295
INE205A01025
VEDL
INE205A01025
Global Stock Exchange
New York Stock Exchange (NYSE)
VEDL
CUSIP 92242Y100
American Depository Shares (ADS)
Notes:
1. Non-Convertible Debentures of the Company are also listed on the BSE Limited (BSE), details of the same are provided later in this report;
2.
During the FY 2019, the Company had redeemed its Redeemable Preference Shares (RPS) pursuant to their terms of issuance which were listed on BSE
(Scrip Code: 700134 ISIN: INE205A04011) and NSE (Scrip Code: VEDL P1 ISIN: INE205A04011).
3. Company has paid annual listing fees for the FY 2019 to all the Stock Exchanges (Indian & Global), where the securities of the Company are listed.
STOCK PRICE DATA FOR FY 2019
BSE - HIGH LOW
(` per share)
Mar-19
Feb-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-18
Aug-18
Jul-18
Jun-18
May-18
Apr-18
168.00
145.90
186.85
190.05
190.60
197.10
218.00
205.70
200.75
222.20
238.05
185.20
180.50
202.95
214.25
228.00
246.90
246.70
238.15
243.75
258.30
298.00
NSE - HIGH LOW
(` per share)
Mar-19
Feb-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-18
Aug-18
Jul-18
Jun-18
May-18
167.75
145.80
186.65
190.05
190.20
198.25
218.00
205.35
200.65
221.60
237.90
185.40
180
202.85
213.30
227.75
246.90
246.80
238.25
243.80
258.40
296.65
313.50
271.50
313.50
Apr-18
271.50
Low Price
High Price
Low Price
High Price
NYSE - HIGH LOW
Mar-19
Feb-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-18
Aug-18
Jul-18
Jun-18
May-18
Apr-18
9.56
8.34
10.59
10.26
10.66
10.87
11.89
11.58
11.71
13.01
14.36
16.78
Low Price
High Price
10.56
9.8
11.42
11.84
12.47
13.23
13.41
13.44
13.88
15.14
17.69
19.05
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 229
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
VEDL SHARE PRICE V/S BSE SENSEX & BSE METAL INDEX
VEDL SHARE PRICE V/S NSE NIFTY 50 & NSE METAL INDEX
140
120
100
80
60
40
20
0
8
1
-
l
i
r
p
A
8
1
-
y
a
M
8
1
-
e
n
u
J
8
1
-
y
u
J
l
8
1
-
g
u
A
8
1
-
p
e
S
8
1
-
t
c
O
8
1
-
v
o
N
8
1
-
c
e
D
9
1
-
n
a
J
9
1
-
b
e
F
9
1
-
r
a
M
140
120
100
80
60
40
20
0
8
1
-
l
i
r
p
A
8
1
-
y
a
M
8
1
-
e
n
u
J
8
1
-
y
u
J
l
8
1
-
g
u
A
8
1
-
p
e
S
8
1
-
t
c
O
8
1
-
v
o
N
8
1
-
c
e
D
9
1
-
n
a
J
9
1
-
b
e
F
9
1
-
r
a
M
VEDL
BSE Sensex
BSE Metal
VEDL
Nifty 50
NSE Metal
SHARE TRANSFER SYSTEM
REQUEST RECEIVED
BY KARVY
DOCUMENT
VERIFICATION
APPROVAL
COMMUNICATION
TO SHAREHOLDER
• Requests relating to
• Karvy checks the authenticity
transfer, transmission,
deletion are received
from shareholders having
physical shareholding.
of documents;
• Sends the request to the
Company for processing.
• The Company also checks
the validity of documents;
• Requests are then approved
by the duly constituted
Share & Debenture Transfer
Committee.
• Post Committee approval,
Karvy completes the
process and the same
is communicated to the
shareholders;
• Requests are generally
processed within 15
days of receipt of the
documents, if documents
are clear and valid in all
respects.
A certificate by a Practicing Company Secretary is issued on a half yearly basis pursuant to Regulation 40(9) of Listing Regulations
confirming due compliance of share transfer formalities by the Company.
Quarterly audits are also carried out by the Practicing Company Secretary to reconcile the total admitted capital with NSDL
and CDSL confirming 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. The reports for the same were timely filed with BSE
Limited and NSE.
Capital Evolution
The details of capital evolution of the Company can be accessed on the website of the Company at
https://www.vedantalimited.com
Shareholding Distribution
Shareholding according to shareholders class as on March 31, 2019
Shareholding of Nominal value of `1/-
No. of shareholders
% of Total shareholders
No. of shares held
Shareholding (%)
1 – 5000
5001 – 10000
10001 – 20000
20001 – 30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 & Above
Total
230
599,706
4,224
1,709
461
212
130
208
512
98.77
149,037,261
0.70
0.28
0.08
0.03
0.02
0.03
0.09
30,377,440
23,807,374
11,299,346
7,273,996
5,909,606
15,035,128
3,474,456,488
3,717,196,639
4.01
0.82
0.64
0.30
0.20
0.16
0.40
93.47
100.00
607,162
100.00
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS S. No. Category
(a) Promoter’s holding
Indian promoters
Foreign promoters (including ADS)
(b) Public Shareholding
March 31, 2019
No. of shares
held
Percentage of
shareholding
Face value ` 1/-
160,656
1,863,458,132
0.01%
50.13%
Banks, Mutual funds, Financial Institutions, Insurance Companies (Central/ State Govt.
Institutions/ Non-Govt. Institutions)
695,231,447
18.70%
FIIs/Foreign Corporate Bodies
Body Corporates
Indian Public
NRIs
Trust
H U F
Clearing Members
Foreign Bodies - DR
Foreign Nationals
IEPF
NBFCs
ESOS Trust
(c) American Depository Receipts
Grand Total
611,439,208
116,677,370
225,098,233
8,889,724
14,722,703
8,116,238
5,193,604
1,270,234
1,280
2,407,129
45,235
14,998,702
149,486,744
16.45%
3.14%
6.06%
0.24%
0.40%
0.22%
0.14%
0.03%
0.00%
0.06%
0.00%
0.40%
4.02%
3,717,196,639
100.00%
1.
2.
Twinstar Holdings Limited (Promoter) holds 24,823,177 American Depository Shares (ADS) representing 99,292,708 equity shares. One ADS represents
four equity shares.
308,232 equity shares are pending for allotment and listing hence, are kept under abeyance category since they are under dispute.
SHAREHOLDING DISTRIBUTION
HOLDING DISTRIBUTION
Promoter & Promoter Group
Foreign Institutional Investors
Domestic Institutional Investors
Individuals (Indian Resident & NRIs)
Others - Body Corporates, HUF,
Trusts, Foreign Nationals, etc.
(%)
50.14
20.50
18.70
6.29
4.36
NSDL
CDSL
Physical
(%)
88.88
10.80
0.32
Dematerialisation of Shares and Liquidity
The shares of the Company are compulsorily traded
in dematerialised form on the stock exchanges. As on
March 31, 2019, ~ 99% shares of the Company are held in
dematerialised form.
Pursuant to the amendment in Listing Regulations, post
April 1, 2019, except in case of transmission or transposition
of securities, requests for effecting transfer of securities
shall not be processed unless the securities are held in the
dematerialised form with a depository.
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.
Outstanding GDRs/ ADRs/ Warrants/ Options
In June 2007 and July 2009, Vedanta Limited (erstwhile
Sterlite Industries (India) Ltd.) had 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 62,194,863 representing ADS were outstanding as on
March 31, 2019. As of the year end, there were nine registered
holders of the ADS.
Citibank N.A., New York acts as the Depository for the ADS /
ADR issued by the Company.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 231
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Report on Corporate Governance continued
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:
1
2
3
4
5
6
7
8
9
S. No.
ISIN Number
Issuance date
Maturity date
Coupon rate
Payment frequency
INE205A07030 17-Aug-15
17-Aug-20
9.45%
Annual
INE205A07048 30-Sep-16
20-Apr-20
8.70% Interest Compounded Annually
and payable at Maturity
INE205A07055 30-Sep-16
27-Sep-19
8.65% Interest Compounded Annually
1,500
and payable at Maturity
INE205A07063 7-Oct-16
15-Apr-21
8.75% Interest Compounded Annually
2,500
and payable at Maturity
INE205A07071 7-Oct-16
15-Sep-21
8.75% Interest Compounded Annually
2,500
and payable at Maturity
No. of NCDs
(face value of `10
lakh each)
20,000
6,000
INE205A07089 28-Oct-16
INE205A07097 22-Nov-16
28-Oct-19
22-Apr-20
INE205A07105 30-Nov-16
29-Nov-19
INE205A07113 31-May-17
31-May-19
10
11
12
13
INE205A07121 20-Dec-17
INE205A07139 5-Apr-18
INE205A07147 5-Apr-18
INE205A07154 4-Jul-18
4-Dec-20
5-Apr-21
15-Jun-21
2-Jul-21
Credit Ratings
8.25%
7.95%
7.50%
7.60%
7.80%
8.50%
8.50%
9.18%
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
3,000
3,000
2,000
3,500
5,000
23,500
16,500
10,000
Amount (in Crores)
2,000
600
150
250
250
300
300
200
350
500
2,350
1,650
1,000
Status as on March 31, 2018
Status as on March 31, 2019
Date of Action
CRISIL
India Ratings
CRISIL
India Ratings
CRISIL
India Ratings
Bank Loans
CRISIL AA/
Outlook
Positive
IND AA/
Outlook
Positive
CRISIL AA/
Outlook
Stable
IND AA/
Outlook
Stable
Working Capital
Lines
Non-Convertible
Debentures
-
-
CRISIL AA/
Outlook
Positive/
CRISIL A1+
CRISIL AA/
Outlook
Positive
-
-
CRISIL AA/
Outlook
Stable/
CRISIL A1+
CRISIL AA/
Outlook
Stable
Change in outlook on
February 19, 2019. The lower
profitability, softer commodity
prices and addition of
Electrosteel acquisition
debt elongated company’s
deleveraging plans
vis-a-vis CRISILs earlier
expectation resulting in
change in outlook to Stable
from Positive.
Same as above
Same as above
Change in Outlook on
February 26, 2019.
India Ratings changed the
rating outlook to Stable
from Positive while affirming
the ratings due to delay in
deleveraging on account
of acquisition outflows
and higher-than-expected
dividend distribution.
NA
NA
Commercial Paper
CRISIL A1+ IND A1+
CRISIL A1+ IND A1+
No Change
No Change
232
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Plant Locations
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
• Pune Old Highway, Takwe Khurd. Post Kamshet. Taluka Maval. Dist. Pune – 410 405 Maharashtra,
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 – 403 107, India
Metallurgical Coke (Met Coke)
• 207, Navelim, Sankhalim, Bicholim Goa – 403 505, India
PIG Iron Division 2
Aluminium Smelters
Alumina Refinery
• SY No. 177 N 120 (P) Navelim P.O. Sanquelim Bicholim Goa 403 505, India
• PMO Office, Bhurkahamuda, PO-Sripura, Dist – Jharsuguda, Odisha – 768 202, India
• Alumina Refinery Project, At/PO – Lanjigarh, Via – Viswanathpur, Kalahandi, Lanjigarh,
Odisha – 766 027, India
Aluminium
• Post Box No. 4, Mettur Dam R.S. - 636 402, Salem District, Tamil Nadu, India
• Gat No. 924 to 927. Sanaswadi Taluka Shirur.
Dist. Pune - 412 208 Maharashtra, India **
Power
• Bhurkahamunda, PO -Sripura, Dist- Jharsuguda,
Odisha -768 202, 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- 628 002, 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
−Suvali Onshore terminal, Gujarat
−Raava Onshare terminal, Andhra Pradesh
Paper **
• GIDC Doswada, Ta. Fort Songadh, District Tapi,
Gujarat – 394 365, India
*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.
** Non-Operation Unit
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 233
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Commodity Price Risk or Foreign Exchange Risk and
Hedging Activities
Fluctuation in commodity prices
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 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), a committee of the Board, reviews our
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 our 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.
Commodity
Name1
S. No.
Exposure in amount
towards the particular
commodity (` in Crore)
Aluminium2
20,609
Units
KT
Oil2
Gas2
Copper3
Silver3
Gold3,4
6,838 mmboe
227 mmscf
16,098
168
1,057
KT
OZ
OZ
1
2
3
4
5
6
Exposure in quantity
towards the particular
commodity
% of such exposure hedged through commodity derivatives
Domestic market
International market
OTC
Exchange
OTC
Exchange
1,340
15
3,027
372
1,659,005
123,124
0
0
-
0
0
0
0
0
-
0
0
73
0
0
-
0
89
9
62
0
-
92
0
0
Total
62
0
-
92
89
82
1.
Commodity means a commodity whose price is fixed by reference to an international benchmark and having a material effect on the
financial statements
2.
Exposure for Aluminium and Oil is based on sales and closing stock and that for Gas is based on sales.
3.
Gold and Silver are sold in the form of anode slime/copper concentrate. Anode slime is the residue formed while refining copper. Exposure for Copper
(including Gold and Silver) is based on opening stock, purchases and sales. Percentage of exposure not hedged represents unpriced transactions as at
March 31, 2019 as the same will be hedged as per the Company’s policy and contractual terms once price period is fixed.
4.
During the year, with respect to gold, some of the derivatives purchased through international OTC market were later migrated to domestic exchange
market. These have been presented under the domestic exchange market above.
Total fees for all services on a consolidated basis to the statutory auditor
Particulars
Audit fees (audit and review of financial statements)
Audit-related fees (including other miscellaneous audit related certifications)
Tax fees (tax audit, other certifications and tax advisory services)
All other fees (certification on corporate governance and advisory services)
Total
Note: All amounts are exclusive of GST
234
(` in Crore)
March 2019
24
0
1
1
26
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
OTHER DISCLOSURES
Framework for monitoring Subsidiary Companies
With respect to the FY under review, the Company has no
material unlisted subsidiary pursuant to the provisions of
Regulation 24(1) of the Listing Regulations.
Confirming with the Listing Regulations, the Company
has a policy on Determining Material Subsidiary,
approved by the Board. The policy can be accessed at
https://www.vedantalimited.com.
The subsidiary companies have their separate Board of
Directors who are authorised to exercise all the responsibilities,
duties and rights for effective monitoring and management of
the subsidiaries. The Company supervises and monitors the
performance of subsidiary companies by:
i.
ii.
Reviewing by the Audit Committee of the financial
statements and, in particular, the investments made by the
subsidiary companies;
Placing before the Board, the minutes of each of the Board
meetings of the subsidiary companies and a statement of
all significant transactions of the subsidiary companies for
their review and noting;
Materially Significant Related Party Transactions
All the Related Party Transactions were in consensus with the
provisions of Companies Act, 2013 and Listing Regulations
and were in ordinary course of business and at arm’s length
basis. A detailed information note on material significant
related party transactions forms a part of Director’s Report.
The Company has a policy on Related Party Transactions,
which regulates all the Related Party Transaction entered into
by the Company. This policy has been approved by the Board
and displayed on the Company’s website at
https://www.vedantalimited.com
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
No penalty or strictures have been imposed by stock exchange
or SEBI or any statutory authority on any matter related to
capital markets on your Company during the last three years.
Vigil Mechanism/Whistle-Blower policy
Your Company promotes utmost standards of moral behaviour
and legal business conduct. The employees have been
given access to provide any complaint w.r.t. the Company’s
accounting, internal accounting controls, auditing matters
or any such 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.
All the employees of the Company and its subsidiaries are
encouraged and expected to raise their concern. The Audit
Committee has laid down procedure governing the receipt,
retention and treatment of complaints. Your Company has in
place a Whistle-Blower Policy , as part of vigil mechanism and
can be accessed at https://www.vedantalimited.com.
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 e-mail
ID (sgl.whistleblower@vedanta.co.in), a centralised database,
a 24X7 whistle-blower hotline and a web-based portal
(www.vedanta.ethicspoint.com) have been created to facilitate
receipt of complaints.
It is also affirmed that no personnel has been denied access to
the Audit Committee.
24X7
Hotline
Web-Based
Portal
WHISTLE-
BLOWER
POLICY
Dedicated
e-mail ID
Centralised
database
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 235
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Disclosure in relation to the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013
The detailed disclosure forms part of the Directors’ Report.
Compliances
DISCRETIONARY REQUIREMENTS:
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
To move towards a
regime of financial
statements with
unmodified audit
opinion
Internal auditor may
report directly to the
Audit Committee
The Board of the
Quaterly Financial
Company is chaired by
an Executive Director
who maintains the
Chairman’s office at the
Company’s expense.
Results were sent to the
shareholders whose
e-mail Id was registered
with the Company.
There was no qualification
by the auditors on the
financial statements
of the Company.
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.
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
1.
Board of Directors
Regulation
17
Compliance Status
(Yes/No/NA)
Complied with the following
Yes
• Composition {17(1), 17(1A)}
• 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)}
• Annexure in Notice for each Special item to be transacted at AGM
{17(11)}
• Other directorship of Directors {17A (1) and (2)}
• 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)}
2. Maximum Number of
17A
Directorship
3.
Audit Committee
18
Yes
Yes
236
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS S. No. Particulars
4.
Nomination and
Remuneration
Committee
Regulation
19
Compliance Status
(Yes/No/NA)
Yes
Complied with the following
• Composition {19(1)}
5.
Stakeholder Relationship
Committee
20
Yes
6.
Risk Management
Committee
21
Yes
7.
Vigil Mechanism
8.
Related Party
Transactions
22
23
Yes
Yes
9.
Subsidiaries of the Entity
24
Yes
• Chairperson {19(2) and (3)}
• Quorum {19(2A)}
• Meeting {19(3A)}
• Role of the Committee {19(4)}
• Composition {20(1)}
• Chairperson {20(2)}
• Other Members {20(2A)}
• Meeting {20(3A)}
• Role of the Committee {20(4)}
• Composition {21(1) and (2)}
• Chairperson {21(3)}
• Meeting {21(3A)}
• Role of the Committee {21(4)}
• Formulation of Vigil Mechanism for Directors and employees {22(1)}
• Direct access to Chairperson of Audit Committee {22(2)}
• Policy on Materiality of Related Party Transactions and dealing with
Related Party Transactions {23(1)}
• Payments made to related party w.r.t brand usage or royalty {23(1A)}
• Approval including omnibus approval of Audit Committee {23(2) and
(3)}
• Review of Related Party Transactions
• There were no material Related Party Transactions
• 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)}
10. Secretarial Audit
11. Obligations with respect
to Independent Directors
24A
25
Yes
Yes
• Secretarial audit report {24A}
• Alternate Directorship for Independent Director {25(1)}
• Tenure of Independent Director {25 (2)}
• Meetings of Independent Directors {25(3) and (4)}
• Replacement {25(6)}
• Familiarisation of Independent Directors {25(7)}
• Declaration of Independence {25(8)}
26
Yes
• Director and Officers Insurance {25(10)}
• Memberships/Chairmanships in Committees {26(1) and (2)}
12. Obligations with respect
to Employees including
Senior Management,
Key Managerial Persons,
Directors and Promoters
13. Other Corporate
Governance
Requirements
14. Website
27
46
• Affirmation on compliance with 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)}
Yes
• Compliance with discretionary requirements {27(1)}
• Filing of quarterly compliance report on Corporate Governance
{27(2)}
Yes
• 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 2018-19 237
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Corporate Policies of the Company
Your Company is inclined towards following highest levels of ethical standards in all our business transactions. To ensure the
same, the Company has adopted various policies, codes and practices. The policies are reviewed periodically by the Board and
are updated in line with amended laws and requirements. The key policies adopted are detailed below:
Category of Policy/Code Brief summary
Web link
Amendments during FY 2019
Code of Conduct
and Ethics
Corporate Social
Responsibility
Policy
Nomination &
Remuneration
Policy
The Code details on uncompromising business ethics
which is an integral part of Company’s values and
method of conducting business. It’s based on the
core values of Trust, Entrepreneurship, Innovation,
Excellence, Integrity, Respect and Care.
The Whistle-Blower Policy also forms part of the Code.
The Code also covers areas such as Conflict
of Interest, Gift, Competition and Fair dealings,
Protection and use of Company Assets etc.
The policy ensures that the conduct of Company’s
business impacts the society through major thrust
areas of education, women empowerment, sport
& culture, drinking water & sanitation, agriculture &
animal husbandry, community infrastructure, health
care and disaster management and rescue and relief
operations.
The policy details the guidelines on identification
and appointment of individual as a Director, KMP and
Senior Management Personnel including the criteria
on their qualification and independence, manner and
criteria for effective evaluation of the performance.
The Policy also details the compensation principles.
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the Code.
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the policy.
https://www.vedantalimited.com/
CorporateGovernance
Insider Trading
Prohibition Code
The Code is a guideline to regulate, monitor and
report trading in securities of the Company, Policy &
Procedures for inquiry in case of leak of Unpublished
Price Sensitive Information and Code of Practices
and Procedures for Fair Disclosure & Policy for
determination of Legitimate Purpose.
https://www.vedantalimited.com/
CorporateGovernance
The Policy Details Guidelines For Dividend Distribution
for Equity Shareholders as per the requirements of
the Listing Regulations.
This Policy sets out the philosophy and processes that
is to followed for approval and review in respect of
transactions entered into by the Company with the
identified Related Parties.
The policy determines the guidelines for material
subsidiaries of the Company and also provides the
governance framework for such material subsidiaries.
The policy determines the requirements for disclosing
material events including deemed material events for
the Company and its subsidiary companies which are
in nature of Unpublished Price Sensitive Information.
The policy also lays the guidelines on archival and
retention of records of the Company.
https://www.vedantalimited.com/
CorporateGovernance
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the policy.
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the policy.
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the policy.
The purpose to this policy is to create and maintain
a healthy and conducive work environment, free
of discrimination. This includes discrimination on
any basis, including gender and any form of sexual
harassment.
https://www.vedantalimited.com/
CorporateGovernance
There has been no change
in the policy.
Dividend
Distribution
Related Party
Transaction Policy
Material
Subsidiaries
Policy for
determination
of Materiality for
Fair Disclosure of
Material Events
/ Unpublished
Price Sensitive
Information to
Stock Exchange(s)
and Archival Policy
Policy on
Prevention,
Prohibition and
Redressal of Sexual
Harassment at
Workplace
238
The Board on the
recommendation of
the NRC had amended
the Policy on March
28, 2019 to include
the responsibilities of
senior management,
recommendation for their
appointment, removal,
remuneration and
succession planning.
The Board on
recommendation of the
Audit Committee had
amended the Code on
March 28, 2019 effective
April 1, 2019 to include the
recent SEBI Regulations
amendments.
There has been no change
in the policy.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS Awareness Sessions/Workshops on Governance practices
Vedanta as an organisation strongly supports transparency
and openness and believes in zero tolerance for unethical
practices. Employees across the Company as well as the
group are regularly sensitised about the various policies
and governance practices of the Company through various
interactive tools. Additionally, the Company also drives a
group-wide ‘Ethics Compliance Month’ as part of its special
annual initiative wherein it conducts awareness and training
sessions covering on governance and internal policies such as
prevention of insider trading, prevention of sexual harassment,
anti-bribery and anti-corruption, anti-trust laws etc. Further, the
Company has also developed an automated training module
for a mandatory annual training for all its employees across
the group and reinforce the principles under the Code of
Business Conduct and Ethics, the Whistle-Blower Policy etc.
Moreover, the senior management places great emphasis on
good governance practices by setting the tone at the top and
encouraging employees to educate themselves and to ensure
transparency and integrity in their day-to-day activities.
Statutory Compliance System
The Company has an internal standard operating procedure
to manage statutory compliances across all businesses and
has also deployed a top of the line automated compliance
management system. This ensures best in class compliance
monitoring and reporting with regular updates on checklists
of all applicable statutory requirements including corporate
laws, environmental laws, labour laws, industry laws amongst
others. As a best practice, we have also made it mandatory for
all CEOs to issue and sign-off compliance certificates for their
respective businesses.
Annexure I
Declaration by Chief Executive Officer on Code of Business Conduct and Ethics of the Company
In accordance to the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, I, Srinivasan Venkatakrishnan, Whole-Time Director & Chief Executive Officer of Vedanta Limited, 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 2019.
Place Mumbai
Date May 7, 2019
For Vedanta Limited
Srinivasan Venkatakrishnan
Whole-Time Director & Chief Executive Officer
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 239
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Annexure II
CERTIFICATION
We, Srinivasan Venkatakrishnan, Whole-Time Director & 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.
Srinivasan Venkatakrishnan
Whole-Time Director & Chief Executive Officer
DIN: 08364908
G. R. Arun Kumar
Whole-Time Director & Chief Financial Officer
DIN: 01874769
Place: Mumbai
Date: May 7, 2019
240
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
Annexure III
Certificate under Regulation 34(3) and Schedule V Part C of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
To
The Members
Vedanta Limited
1st Floor, C wing, Unit 103,
Corporate Avenue Atul Projects,
Chakala, Andheri (East)
Mumbai 400093, Maharashtra
To the best of our information and according to explanation given to us and on the basis of written Confirmation received from
Directors of Vedanta Limited (“Company”), we hereby Certify that as on March 31, 2019, None of the Directors on the Board of
the Company have been debarred or disqualified from being appointed or continuing as director of the Company by SEBI, MCA
or any such statutory authority.
Date: May 7, 2019
Place: New Delhi
For Chandrasekaran Associates
Company Secretaries
Dr. S. Chandrasekaran
Senior Partner
Membership No. FCS No.: 1644
Certificate of Practice No.: 715
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 241
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Report on Corporate Governance continued
Independent 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 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, 2019. This report is required by the Company for annual submission to the Stock exchange and to be
sent to the Shareholders of the Company.
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.
AUDITOR’S 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.
ii.
Reading and understanding of the information prepared by the Company and included in its Corporate
Governance Report;
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, 2019 and verified that at least one women director was on the
Board during the year;
iv. Obtained and read the minutes of the following meetings held from April 1, 2018 to March 31, 2019:
(a) Board of Directors;
(b) Audit committee;
(c) Annual General meeting;
(d) Nomination and remuneration committee;
(e) Stakeholders Relationship Committee;
(f) Risk management committee; and
(g) Corporate Social Responsibility Committee
242
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19STATUTORY REPORTS
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.
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 for the year ended March 31, 2019, 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 compliance with the relevant regulations of Corporate
Governance 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.
Place: Mumbai
Date: May 7, 2019
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Raj Agrawal
Partner
Membership Number: 82028
UDIN No.: 19082028AAAAAB6854
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 243
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Independent Auditor’s Report
To the Members of Vedanta Limited
REPORT ON THE AUDIT OF THE STANDALONE IND AS
FINANCIAL STATEMENTS
OPINION
We have audited the accompanying standalone Ind AS
financial statements of Vedanta Limited (“the Company”),
which comprise the Balance sheet as at March 31, 2019,
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 notes to the financial statements, including
a summary of significant accounting policies and other
explanatory information.
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone Ind AS financial statements give the information
required by the Companies Act, 2013 (“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, 2019, its profit
including other comprehensive income, its cash flows and the
changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone Ind AS financial
statements in accordance with the Standards on Auditing
(SAs), as specified under section 143(10) of the Act.
Our responsibilities under those Standards are further
described in the ‘Auditor’s Responsibilities for the Audit of
the Standalone Ind AS Financial Statements’ section of our
report. We are independent of the Company in accordance
with the ‘Code of Ethics’ issued by the Institute of Chartered
Accountants of India together with the ethical requirements
that are relevant to our audit of the financial statements under
the provisions of the Act and the Rules thereunder, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements and the Code of Ethics. 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.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
standalone Ind AS financial statements for the financial year
ended March 31, 2019. These matters were addressed in
the context of our audit of the standalone Ind AS financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have determined the matters described below to be
the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s
responsibilities for the audit of the standalone Ind AS financial
statements section of our report, including in relation to these
matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of
the risks of material misstatement of the standalone Ind AS
financial statements. The results of our audit procedures,
including the procedures performed to address the matters
below, provide the basis for our audit opinion on the
accompanying standalone Ind AS financial statements.
Key audit matters
How our audit addressed the key audit matter
Recoverability of carrying value of property plant and equipment, capital work in progress, exploration intangible assets under
development and investments being carried at cost (as described in note 3c(A)(ii), 3c(A)(iii), 3c(A)(x), 5, 6A and 31 of the standalone
Ind AS financial statements)
As at March 31, 2019, the carrying value of property, plant and
equipment, capital work in progress, exploration intangible assets
under development and investment being carried at cost was
` 120,941 Crore. We focused our efforts on the Cash Generating
Units (“CGUs”) of (a) Tuticorin within the copper segment; and (b)
Krishna Godavri basin within the oil and gas segment; as they had
impairment and/or impairment reversal indicators.
Recoverability of property plant and equipment, capital work in
progress, exploration intangible assets and investment being carried
at cost has been identified as a key audit matter due to :
• The significance of the carrying value of assets being assessed.
• The size of impairment charges and reversals in earlier years.
• The fact that the assessment of the recoverable amount of
the Company’s CGUs and investments involves significant
judgements about the future cash flow forecasts and the discount
rate that is applied.
• The withdrawal of the Company’s licenses to operate in current
year in one of the jurisdictions’ and consequential litigation.
Our audit procedures included the following:-
•
•
Critically assessed through an analysis of internal and external
factors impacting the Company, whether there were any
indicators of impairment (or reversal of impairment) in line with
Ind AS 36.
Specifically in relation to the CGUs where impairment and
impairment reversal indicators were identified, obtained
and evaluated the valuation models used to determine the
recoverable amount by challenging the key assumptions used by
the management including:
− Considering forecasted volumes in relation to asset
development plans.
− Critically assessing management’s forecasting accuracy by
comparing prior year forecasts to actual results and assessing
the potential impact of any variances.
− Corroborating the price assumptions used in the models
against analyst consensus.
− Testing the appropriateness of the weighted average cost
of capital used to discount the impairment models through
engaging our internal valuations experts.
− Testing the integrity of the models together with their clerical
accuracy.
244
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Key audit matters
How our audit addressed the key audit matter
The key judgements and estimates centered on the likely outcome
of the litigations, cash flow forecasts, prices and discount rate
assumptions. An impairment reversal of ` 313 Crore was recorded in
the oil and gas segment during the year (refer note 31).
Additionally, wherever impairment trigger arose due to withdrawal
of Company’s license to operate, we inspected the external legal
opinions in respect of the merits of the case and critically assessed
management’s position through discussions with the legal counsel
to determine the basis of their conclusion.
• Assessed the competence and objectivity of the Company’s
external experts, to satisfy ourselves that these parties are
appropriate in their roles within the estimation process.
• Assessed the adequacy of the disclosures made by the Company
in this regard.
Revenue recognition (as described in note 3a(A), 3c(A)(xi), 3c(B)(ii) and 26 of the standalone Ind AS financial statements)
For the year ended March 31, 2019 the Company has recognized
revenue from operations of ` 38,098 Crore.
Revenue recognition has been recognized as a key audit matter due
to diverse and complex revenue streams across the Company.
We have identified following key areas for consideration:
• Our audit procedures included considering the appropriateness
of the Company’s revenue recognition accounting policies and
assessing compliance with the policies in terms of Ind AS 115.
Our audit procedures included the following:-
• Complexity associated with the calculation of profit petroleum
within the Oil & Gas segment.
• Complex calculation of power tariff agreements with Grid
Corporation of Odisha Limited (GRIDCO).
• Cut-off: The variety of terms in the copper, iron ore and aluminum
segments that define when control is transferred to the customer,
as well as the high value of the transactions, give rise to the risk
that revenue is not recognized in the correct period.
• Performed walkthroughs and test of controls, assisted by IT
specialists, of the revenue recognition processes and assessed
the design and operating effectiveness of key controls.
• Inspected the terms of production sharing contracts in the Oil &
Gas segment and tested the underlying cost recovery and profit
petroleum calculations used by the management. Also, inspected
external legal opinions (where considered necessary) to evaluate
the merits of the claims made by the Company in computing
government’s share of revenue. We also assessed the adequacy
of disclosures made by the Company relating to calculation of
profit petroleum within the Oil & Gas segment.
• Inspected the terms of the power purchase agreement to assess
the reasonability of the inputs used in the calculation of the
power tariff in respect of the revenue recognized for GRIDCO.
Other procedures relating to the revenue of the Power division
are mentioned in the recoverability of disputed receivables
section.
• Selected a sample of sales, in the copper, iron ore and aluminum
segments, made pre and post year end, agreeing the date of
revenue recognition to third party support, such as bills of lading,
to confirm sales are recognized according to contract conditions.
• Examined invoice samples with various shipping terms to ensure
that revenue has been recognized appropriately.
Recoverability of disputed receivables (as described in note 3c(B)(i) and note 7 of the standalone Ind AS financial statements)
• As of March 31, 2019 the value of disputed receivables in the
Our audit procedures included the following:-
power segment aggregated to ` 1,248 Crore.
• Examined the underlying power purchase agreements.
• Due to disagreements over the quantification or timing of
the receivable, the recovery of said receivables are subject
to increased risk. Some of these balances are also subject to
litigation. The risk is specifically related to receivables from
GRIDCO. These receivables include long outstanding balances as
well and are also subject to counter party
credit risk.
• Inspected the relevant state regulatory commission, appellate
tribunal and court rulings.
• Inspected external legal opinions in respect of the merits of the
case and critically assessed management’s position through
discussions with the management’s in-house legal team to
determine the basis of their conclusion.
• Accordingly, the same has been considered as a key audit matter.
• Examined management’s assessment of recoverability of
receivables.
• Assessed the adequacy of the disclosures made by the Company
in this regard.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 245
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
Key audit matters
How our audit addressed the key audit matter
Claims and exposures relating to taxation and litigation (as described in note 3c(B)(ii) and 35 of the standalone Ind AS financial
statements)
• The Company is subject to a large number of legal and tax
Our audit procedures included the following:-
related claims which have been disclosed / provided for in the
financial statements based on the facts and circumstances of
each case.
• Taxation and litigation exposures have been identified as a key
audit matter due to the complexities involved in these matters,
timescales involved for resolution and the potential financial
impact of these on the financial statements. Further, significant
management judgement is involved in assessing the exposure of
each case and thus a risk that such cases may not be adequately
provided for or disclosed.
• Gained an understanding of the process of identification of
claims, litigations and contingent liabilities and identified key
controls in the process. For selected controls we have performed
tests of controls.
• Obtained the summary of Company’s legal and tax cases
and critically assessed management’s position through
discussions with the Legal Counsel, Head of Tax and operational
management, on both the probability of success in significant
cases, and the magnitude of any potential loss.
•
Inspected external legal opinions (where considered necessary)
and other evidence to corroborate management’s assessment of
the risk profile in respect of legal claims.
• Engaged tax specialists to technically appraise the tax positions
taken by management with respect to local tax issues.
• Assessed whether management assessment of similar cases is
consistent across the divisions or that differences in positions are
adequately justified.
• Assessed the relevant disclosures made within the financial
statements to address whether they appropriately reflect
the facts and circumstances of the respective tax and legal
exposures and the requirements of relevant accounting
standards.
Recoverability of unutilized Minimum Alternate Tax (MAT) credits included under deferred tax assets (as described in note 3c(A)(ix)
and 32 of the standalone Ind AS financial statements)
• As of March 31, 2019, the Company has recognized MAT credits
of ` 3,971 Crore, included under deferred tax assets that can be
utilized against future tax liabilities.
• The analysis of the recoverability of such deferred tax assets has
been identified as a key audit matter because the assessment
process involves judgement regarding the future profitability
and the likelihood of the realization of these assets, in particular
whether there will be taxable profits in future periods that support
the recognition of these assets. This requires assumptions
regarding future profitability, which is inherently uncertain.
Accordingly, the same is considered as a key audit matter.
Our audit procedures included the following:-
• Obtained and analysed the future projections estimated by
management, assessing the key assumptions used, including
the analysis of the consistency of the actual results obtained
by the various segments with those projected in the previous
year. We further obtained evidence of the approval of the
budgeted results included in the current year’s projections, and
the reasonableness of the future cash flow projections and the
consistency of those projections with those used in other areas
of estimation such as those used for assessing the recoverability
of assets.
• Of the above MAT credits, we focused our effort on MAT assets
• Tested the completeness and accuracy of the MAT credits
of ` 1,161 Crore which are expected to be utilized during the last
two years of the stipulated fifteen year carry forward period from
the year in which, the same arose.
recognized as deferred tax assets.
INFORMATION OTHER THAN THE FINANCIAL
STATEMENTS AND AUDITOR’S REPORT THEREON
The Company’s Board of Directors is responsible for the other
information. The other information comprises the information
included in the Annual report, but does not include the
standalone Ind AS financial statements and our auditor’s
report thereon.
Our opinion on the standalone Ind AS financial statements
does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE
CHARGED WITH GOVERNANCE 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 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 the accounting principles generally accepted in India,
including the Indian Accounting Standards (Ind AS) specified
under section 133 of the Act read with the Companies
246
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS (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 controls, that were operating
effectively for ensuring the accuracy and completeness
of the accounting records, relevant to the preparation and
presentation of the standalone Ind AS financial statements
that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
In preparing the standalone Ind AS financial statements,
management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are also responsible for
overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the standalone Ind AS financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone Ind
AS financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the standalone Ind AS financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)(i) of
the Act, we are also responsible for expressing our opinion
on whether the Company has adequate internal financial
controls system in place and the operating effectiveness of
such controls.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of
the standalone Ind AS financial statements, including the
disclosures, and whether the standalone Ind AS financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the standalone Ind AS financial
statements for the financial year ended March 31, 2019 and
are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should
not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
OTHER MATTER
We did not audit the financial statements and other financial
information, in respect of 1 unincorporated joint venture
not operated by the Company, whose Ind AS financial
statements include total assets of ` 109 Crore as at March 31,
2019. The unauadited financial information of the said
unincorporated joint venture not operated by the Company
has been furnished to us by the management of the Company.
Our opinion on the standalone Ind AS financial statements,
in so far as it relates to the amounts and disclosures included
in respect of this unincorporated joint venture, is based
solely on such unaudited information furnished to us by
the management. Our opinion is not modified in respect
of this matter.
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.
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MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
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 purposes 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, the 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 the written representations received from
the directors as on March 31, 2019 taken on record by the
Board of Directors, none of the directors is disqualified as on
March 31, 2019 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 with
reference to these standalone Ind AS financial statements
and the operating effectiveness of such controls, refer to our
separate Report in “Annexure 2” to this report;
(g) In our opinion, the managerial remuneration for the year
ended March 31, 2019 has been paid / provided by the
Company to its directors in accordance with the provisions of
section 197 read with Schedule V to the Act;
(h) 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, as amended 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 35 to the standalone Ind AS
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: Mumbai
Date: May 07, 2019
per Raj Agrawal
Partner
Membership Number: 82028
248
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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 ` 63.80 Crore.
(ii) The management has conducted physical verification of
inventories at reasonable intervals during the year except for
inventories aggregating of ` 586 Crore lying at Tuticorin plant
which is under suspension (refer note 3c(A)(x)). No material
discrepancies were noticed on physical verification of
inventories, wherever such verifications were carried out.
Inventories lying with third parties have been confirmed by
them as at March 31, 2019 and no material discrepancies
were noticed in respect of such confirmations.
(iii) (a) The Company has granted loans to 6 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) In our opinion and 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 Companies
(Acceptance of Deposits) Rules, 2014 (as amended).
(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 generally regular in depositing with
appropriate authorities undisputed statutory dues including
provident fund, employees’ state insurance, income-tax,
sales-tax, service tax, duty of custom, 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, 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
Central Excise Act, 1944
Excise Duty
Central Excise Act, 1944
Excise Duty
Central Excise Act, 1944 Oil Cess and NCCD demand
Amount
(` In Crore)
0.40
0.42
53.49
Period to which
the amount relates
Forum where the dispute
is pending
November 07 to July 08
Additional Commissioner
2011-12 to 2015-16
Assistant Commissioner
2003-04 and December 2013
to February 2015
CESTAT/ Supreme Court
Central Excise Act, 1944
Excise Duty
Central Excise Act, 1944
Excise Duty
Central Excise Act, 1944
Excise Duty
Central Excise Act, 1944
Excise Duty
Central Sales Tax 1956
Central Sales Tax 1956
Sales Tax
Sales Tax
179.02
1997-98 to 2015-16
1997-2010
2015-17
CESTAT
Commissioner
Commissioner Appeals
2000-2006 and 2017-18
High Court
2004-05 to 2014-15
Additional Commissioner
1998-99 to 2016-17
High Court
16.70
0.72
98.29
11.09
19.25
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 249
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
Name of the statute
Customs Act,1962
Customs Act,1962
Customs Act,1962
Customs Act,1962
Customs Act,1962
Customs Act,1962
Finance Act,1994
Finance Act,1994
Finance Act,1994
Finance Act,1994
Finance Act,1994
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Nature of the dues
Custom Duty
Custom Duty
Custom Duty
Customs Duty
Custom Duty
Custom Duty
Service Tax
Service Tax
Service Tax
Service Tax
Service Tax
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Income Tax Act,1961
Income tax
Income Tax Act,1961
Income Tax Act,1961
Income tax
Income tax
Amount
(` In Crore)
47.95
31.16
8.27
7.99
12.26
0.18
0.01
Period to which
the amount relates
2011-14 to 2013-14
2004-05 to 2009-10 and
2012-13 to 2016-17
Forum where the dispute
is pending
CESTAT
Commissioner
2007-14 and 2012-13
Commissioner, Appeals
2012-13
Deputy Commissioner
2005-06 to 2006-07
1996-97, 2005-10
High Court
Supreme Court
2011-12 to 2015-16
Assistant Commissioner
213.49
2002-03 to 2014-15
2007-13
CESTAT
Commissioner
0.13
3.35
24.32
11.49
47.40
0.08
322.00
0.12
1.40
554.30
1,575.62
875.14
2009-10 to 2017-18
Commissioner Appeals
2006-07, 2007-08, 2016-17
& 2017-18
High Court
2014-15 and 2018-19
Additional Commissioner
2007-08
2012 to 2015
2008-09 to 2010-11,
2012-13 , 2013-14, 2014-15,
2015-16 and 2016-17
Commissioner
Deputy Commissioner/
Tribunal
High Court
2014-15 and 2015-16
Joint Commissioner
2008-12
Tribunal
2005-06, 2008-09 to
2013-14
2007-08 to 2013-14
2002-03, 2004-05, 2005-06,
2006-07, 2007-08,
2008-09, 2011-12
Commissioner of Income
Tax (Appeals)
High Court
Income Tax Appellate
Tribunal
Income Tax Act,1961
Income tax
30.35
1999-00, 2008-09, 2009-10
Income Tax Act,1961
Witholding Tax demand
18,774.81
2006-07
Not applicable as
application filed for
rectification
Income Tax Appellate
Tribunal
* 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.
(ix) 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. According to the information and
explanations given to us, the Company has not raised monies
by way of initial public offer or further public offer.
(x) 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.
250
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS (xi) 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.
requirements under clause 3(xiv) of the Order are not
applicable to the Company and hence not commented upon.
(xv) 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.
(xvi) 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
(xiv) 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
Place: Mumbai
Date: May 07, 2019
per Raj Agrawal
Partner
Membership Number: 82028
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 251
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
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,
2019 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
by the Company considering the essential components of
internal control stated under the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework)
(“COSO 2013”),. 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 Companies Act, 2013.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting with
reference to these standalone financial statements 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 Companies Act, 2013, 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 with reference to
these standalone financial statements 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
over financial reporting with reference to these standalone
financial statements and their operating effectiveness.
Our audit of internal financial controls over financial reporting
included obtaining an understanding of internal financial
controls over financial reporting with reference to these
standalone financial statements, 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 over
financial reporting with reference to these standalone
financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER
FINANCIAL REPORTING WITH REFERENCE TO THESE
FINANCIAL STATEMENTS
A company’s internal financial control over financial reporting
with reference to these standalone financial statements 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 with reference
to these standalone financial statements 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 WITH REFERENCE
TO THESE STANDALONE FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls
over financial reporting with reference to these standalone
financial statements, including the possibility of collusion
or improper management override of controls, material
252
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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 with reference to
these standalone financial statements to future periods are
subject to the risk that the internal financial control over
financial reporting with reference to these standalone financial
statements 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,
adequate internal financial controls over financial reporting
with reference to these standalone financial statements and
such internal financial controls over financial reporting with
reference to these standalone financial statements were
operating effectively as at March 31, 2019, based on the
internal control over financial reporting criteria established
by the Company considering the essential components of
internal control stated in COSO 2013.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
Place: Mumbai
Date: May 07, 2019
per Raj Agrawal
Partner
Membership Number: 82028
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 253
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Balance Sheet
as at March 31, 2019
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)
Other non-current assets
Total non-current assets
Current assets
Inventories
Financial assets
Investments
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Derivatives
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
(a) Total outstanding dues of micro, small and medium enterprises
(b) Total outstanding dues of creditors other than micro, small and medium enterprises
Derivatives
Other financial liabilities
Provisions
Income tax liabilities (net)
Other current liabilities
Total current liabilities
Total Equity and Liabilities
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
254
Note
As at
March 31, 2019
As at
March 31, 2018
(` in Crore)
5
5
5
5
6A
7
8
9
32
32
10
11
6B
7
12
13
8
20
9
10
14
15
17A
19
22
32
21
17B
18
20
19
22
21
40,972
14,148
34
1,583
64,204
1,248
197
619
3
2,175
3,027
1,28,210
37,132
10,386
44
7,983
62,473
471
-
443
-
2,429
2,577
1,23,938
7,657
8,149
4,378
1,966
3,209
682
118
46
2,630
1,971
22,657
1,50,867
5,537
1,968
1,144
450
14
102
3,003
2,864
23,231
1,47,169
372
77,508
77,880
372
78,941
79,313
20,521
281
988
-
2,468
24,258
14,810
44
852
26
2,479
18,211
17,180
18,320
59
11,203
343
11,483
140
46
8,275
48,729
1,50,867
84
13,982
26
12,244
129
45
4,815
49,645
1,47,169
For and on behalf of the Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Statement of Profit and Loss
for the year ended March 31, 2019
Particulars
Revenue from operations (Net of excise duty)
Add: Excise duty
Revenue from operations (Gross of excise duty)
Other operating income
Other income
Total Income
Expenses:
Cost of materials consumed
Purchases of stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade
Power and fuel charges
Employee benefits expense
Excise duty on sales
Finance costs
Depreciation, depletion and amortisation expense
Other expenses
Share of expenses in producing oil and gas blocks
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 (benefit)/expense
On exceptional items
Net current tax expense
Net deferred tax expense
Net tax (benefit)/expense:
Net Profit for the year (A)
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Re-measurements (loss)/gain of defined benefit plans
Tax credit
(Loss)/gain on FVOCI equity investment
Items that will be reclassified to profit or loss
Net gain/(loss) on cash flow hedges recognised during the year
Tax (expense)/credit
Net (gain)/loss on cash flow hedges recycled to profit or loss
Tax credit/(expense)
Exchange differences on translation
Tax credit/(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
* Restated refer note 2(b)
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
Note
26A
26B
27
28
24
29
5
30
31
32
(` in Crore except otherwise stated)
Year ended
March 31, 2019
38,098
-
38,098
546
6,152
44,796
Year ended
March 31, 2018*
45,046
450
45,496
478
3,559
49,533
15,508
505
307
9,179
862
-
3,757
3,243
5,585
1,227
40,173
4,623
324
4,947
5
(245)
-
112
(128)
5,075
(4)
1
(45)
(48)
78
(27)
(183)
64
520
13
465
417
5,492
25,209
426
(11)
6,643
802
450
3,353
2,842
4,998
1,004
45,716
3,817
5,407
9,224
-
1,026
-
942
1,968
7,256
1
5
90
96
(24)
9
19
(7)
49
(7)
39
135
7,391
33
13.65
19.47
13.08
7.46
For and on behalf of the Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 255
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Statement of Cash Flows
for the year ended March 31, 2019
Particulars
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for :
Depreciation, depletion and amortization
Impairment reversal (net)
Other exceptional items
Provision for doubtful debts/advances/ Bad debts written off
Exploration costs written off
Fair value gain on financial assets held for trading
Loss on sale/ discard of property, plant and equipment (net)
Foreign exchange loss/(gain) (net)
Unwinding of discount on decommissioning liability
Other non-operating income
Share based payment expense
Interest and dividend income
Interest expense
Deferred government grant
Changes in assets and liabilities:
Increase in trade and other receivables
Decrease/(Increase) in inventories
Increase in financial and other assets
Decrease in trade and other payable
Increase in other current and non-current liabilities
Cash generated from operations
Income taxes refund/(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 given to related parties
Loans repaid by 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
Dividend received
Investment made in Subsidiary
Payments made to site restoration fund
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment)/Proceeds from short term loan (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 financing activities
Net 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
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018*
4,947
9,224
3,271
(265)
(59)
-
48
(96)
76
71
30
-
51
(5,947)
3,727
(72)
(844)
490
(853)
(512)
3,331
7,394
305
7,699
(2,498)
60
(380)
30
840
(1,068)
26,571
(25,321)
370
7,147
(1,770)
(27)
3,954
(1,833)
3,407
(2,739)
10,270
(7,658)
(4,042)
(7,005)
(9,600)
2,053
1,231
3,284
2,869
(5,520)
113
38
-
(615)
11
(78)
27
18
27
(2,798)
3,326
(69)
(313)
(2,623)
(1,078)
(1,025)
1,265
2,799
(59)
2,740
(2,198)
7
(225)
223
392
(336)
55,873
(41,353)
610
8,101
(18)
(43)
21,033
3,815
3,650
(3,482)
1,143
(10,721)
(3,489)
(14,461)
(23,545)
228
1,003
1,231
* Restated refer note 2(b)
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
256
For and on behalf of the Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Statement of Changes in Equity
for the year ended March 31, 2019
A. EQUITY SHARE CAPITAL
Equity shares of ` 1/- each issued, subscribed and fully paid up
As at March 31, 2019 and March 31, 2018
B. OTHER EQUITY
Particulars
Balance as at April 01, 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 34)
Balance as at March 31, 2018
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 34)
Balance as at March 31, 2019
Other reserves comprise of:
Particulars
Balance as at April 01, 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
Transfer from/(to) general reserve/retained
earnings
Redemption of preference shares
(Refer Note 15(c))
Recognition of share based payment
Stock options cancelled during the year
Exercise of stock options
Balance as at March 31, 2019
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
(` in Crore)
Total other
equity
79,396
7,256
135
7,391
-
47
-
(12)
(7,881)
78,941
5,075
417
5,492
-
82
-
(2)
(7,005)
77,508
(` in Crore)
Total
17,549
(249)
47
(3)
(22)
17,322
(190)
Number of
shares (in Crore)
372
Amount
(` in Crore)
372
Reserves and Surplus
Items of Other comprehensive income
Capital
reserve
26,027
-
-
-
-
-
-
-
-
26,027
-
-
-
-
-
-
-
-
26,027
Securities
premium
reserve
19,009
-
-
-
-
-
-
-
-
19,009
-
-
-
-
-
-
-
-
19,009
Retained
earnings
15,796
7,256
6
7,262
249
-
3
10
(7,881)
15,439
5,075
(3)
5,072
190
-
7
1
(7,005)
13,704
Other
reserves
(Refer
below)
Equity
instruments
through
OCI
Foreign
Currency
Translation
Reserve
Hedging
Reserve
17,549
-
-
-
(249)
47
(3)
(22)
-
17,322
-
-
-
(190)
82
(7)
(3)
-
17,204
59
-
90
90
-
-
-
-
-
149
-
(45)
(45)
-
-
-
-
-
104
17
-
(3)
(3)
-
-
-
-
-
14
-
(68)
(68)
-
-
-
-
-
(54)
939
-
42
42
-
-
-
-
-
981
-
533
533
-
-
-
-
-
1,514
Capital
redemption
reserve
38
-
-
-
-
38
-
Debenture
redemption
reserve
1,679
(249)
-
-
-
1,430
(190)
Preference
share
redemption
reserve
77
-
-
-
-
77
-
Amalgamation
Reserve
3
-
-
-
-
3
-
General
reserve
15,597
-
-
-
-
15,597
-
Share Based
Payment
Reserve
155
-
47
(3)
(22)
177
-
-
-
-
-
38
-
3,010
-
-
-
1,240
-
-
-
3,087
-
-
-
-
3
(3,010)
-
-
-
-
-
12,587
82
(7)
(3)
249
82
(7)
(3)
17,204
For and on behalf of the Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 257
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 1. COMPANY OVERVIEW:
Vedanta Limited (“the Company”) is a diversified natural
resource company engaged in exploring, extracting and
processing minerals and oil and gas. The Company engages in
the exploration, production and sale of oil and gas, aluminium,
copper, iron ore and power.
power plants at Jharsuguda both situated in the State of
Odisha in India.
• The Company’s power operations include a thermal
coal-based commercial power facility of 600 MW at
Jharsuguda in the State of Odisha in Eastern India.
The Company was incorporated on September 08, 1975
under the laws of the Republic of India. The registered office
of the Company is situated at 1st Floor, ‘C’ wing, Unit 103,
Corporate Avenue, Atul Projects, Chakala, Andheri (East),
Mumbai-400092, Maharashtra. The Company’s shares
are listed on National Stock Exchange and Bombay Stock
Exchange in India. In June 2007, the Company completed
its initial public offering of American Depositary Shares,
or ADS, each representing four equity shares, and listed
its ADSs on the New York Stock Exchange. In July 2009,
the Company completed its follow-on offering of an
additional 131,906,011 ADSs, each currently representing
four equity shares, which are listed on the New York Stock
Exchange.
The Company is majority owned by Twin Star Holdings
Limited (“Twin Star”), Finsider International Company Limited
(“Finsider”), West Globe Limited (“West Globe”) and Welter
Trading Limited (“Welter”) which are in turn wholly-owned
subsidiaries of Vedanta Resources PLC (“VRPLC”), which
was a public limited company incorporated in the United
Kingdom and listed on the London Stock Exchange
(VRPLC has been delisted from London Stock Exchange on
October 01, 2018 and is renamed as “Vedanta Resources
Limited” (“VRL”) with effect from October 29, 2018). Twin Star,
Finsider, West Globe and Welter held 37.1%, 10.8%, 1.2%
and 1.0% respectively of the Company’s equity as at
March 31, 2019.
Details of Company’s various businesses are as follows:
• The Company’s oil and gas business (prior to merger was
owned and operated by erstwhile Cairn India Limited) is
engaged in business of exploration and development and
production of oil and gas.
• The Company’s iron ore business consists of iron ore
exploration, mining and processing of iron ore, pig iron
and metallurgical coke. The Company has iron ore mining
operations in the States of Goa and Karnataka. Pursuant to
Honourable Supreme Court of India order, operations in the
state of Goa are currently suspended.
• The Company’s copper business is principally one of custom
smelting and includes captive power plants at Tuticorin in
Southern India. The Company’s copper business at Tuticorin
has received an order from the Tamil Nadu Pollution Control
Board (“TNPCB”) on April 09, 2018, rejecting the Company’s
application for renewal of consent to operate under the Air
and Water Acts for the 400,000 tpa copper smelter plant in
Tuticorin for want of further clarification and consequently
the operations were suspended. The Company has filed an
appeal with TNPCB Appellate authority against the said order.
During the pendency of the appeal, TNPCB through its order
dated May 23, 2018 ordered for disconnection of electricity
supply and closure of copper smelter plant. Post such
order, the state government on May 28, 2018 ordered the
permanent closure of the plant. (Refer note3(c)(A)(x)).
• The Company’s aluminium business include a refinery and
captive power plant at Lanjigarh and a smelter and captive
258
Besides the above the Company has business interest in zinc,
lead, silver, iron ore, steel and other products and services
through its subsidiaries in India and overseas.
These are the Company’s separate financial statements.
The details of Company’s material subsidiaries, associates and
joint ventures is given in note 38.
2. BASIS OF PREPARATION AND BASIS OF MEASUREMENT
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 and
other relevant provisions of the Companies Act, 2013 (the
Act) (as amended from time to time) and Guidance Note on
Accounting for Oil and Gas Producing Activities issued by the
Institute of Chartered Accountants of India.
These financial statements have been prepared in
accordance with the accounting policies, set out below and
were consistently applied to all periods presented unless
otherwise stated.
These financial statements are approved for issue by the Board
of Directors on May 07, 2019.
Certain comparative figures appearing in these financial
statements have been regrouped and/or reclassified to better
reflect the nature of those items.
All financial information presented in Indian Rupee has
been rounded off to the nearest Crore. Amounts less than
` 0.50 Crore have been presented as “0”.
(b) Reclassification/Restatement
(i) The Company has revised the presentation of forward
premium relating to derivative instruments to present it along
with the mark-to-market gain/loss on these instruments, as
these more appropriately reflect the substance of the forward
premiums on derivative transactions. As a result of the change,
forward premium expense amounting to ` 547 Crore (year
ended March 31, 2019: ` 244 Crore) has been reclassified
from ‘Finance cost’ to ‘other income/ other expense’ for the
comparative year ended March 31, 2018. Similarly, net cash
flows from operating activities in the statement of cash flows
has reduced by an equivalent amount with corresponding
effect on the net cash used in financing activities.
(ii) The classification of export incentives from government has
also been revised to present it under ‘other operating income’,
as the revised classification is more appropriate. As a result of
the change, export incentives amounting to ` 263 Crore has
been reclassified from ‘revenue’ to ‘other operating income’ for
the comparative year ended March 31, 2018. Similarily, scrap
sales and miscellaneous income amounting to ` 100 Crore
and ` 115 Crore respectively have also been reclassified from
‘revenue’ to ‘other operating income’ for the comparative year
ended March 31, 2018.
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(c) 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.
3(a) SIGNIFICANT ACCOUNTING POLICIES
(A) Revenue recognition
• Sale of goods/rendering of services (Revenue from
contracts with customers)
The Company’s revenue from contracts with customers is
mainly from the sale of oil and gas, aluminium, copper, iron
ore and power. Revenue from contracts with customers
is recognised when control of the goods or services is
transferred to the customer which usually is on delivery of the
goods to the shipping agent at an amount that reflects the
consideration to which the Company expects to be entitled in
exchange for those goods or services. Revenue is recognised
net of discounts, volume rebates, outgoing sales taxes/
goods and service tax and other indirect taxes excluding
excise duty. 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) and crude index, as specified in the
contract. Revenue in respect of such contracts is recognised
when control passes to the customer and is measured
at the amount the entity expects to be entitled – being
the estimate of the price expected to be received at the
end of the measurement period. Post transfer of control
of goods, provisional pricing features are accounted in
accordance with 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 are included in Revenue on the face
of the statement of profit and loss and disclosed by way
of note to the financial statements. Final settlement of
the price is based on the applicable price for a specified
future period. The 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 represent the
Company’s share of oil, gas and condensate production,
recognised on a direct entitlement basis, when control is
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
at after reducing government’s share of profit petroleum
which is accounted for when the obligation in respect of
the same arises.
Revenue from sale of power is recognised when delivered
and measured based on rates as per bilateral contractual
agreements with buyers and at a rate arrived at based on
the principles laid down under the relevant Tariff Regulations
as notified by the regulatory bodies, as applicable.
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Company performs part of its obligation by transferring
goods or services to a customer before the customer
pays consideration or before payment is due, a contract
asset is recognised for the earned consideration when
that right is conditional on the Company’s future
performance.
A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration from the customer. If a customer
pays consideration before the Company transfers goods or
services to the customer, a contract liability is recognised
when the payment is received. Contract liabilities are
recognised as revenue when the Company performs under
the contract.
The Company does not expect to have any contracts where
the period between the transfer of the promised goods or
services to the customer and payment by the customer
exceeds one year. As a consequence, the Company does
not adjust any of the transaction prices for the time value
of money.
• 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
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
that on land, buildings, plant, equipment and capital work
in progress is capitalized as property, plant and equipment
under the heading “Mining properties and leases” together
with any amount transferred from “Exploration and evaluation”
assets. The costs of mining properties and leases include
the costs of acquiring and developing mining properties and
mineral rights.
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
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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 costs are included in mining properties
within property, plant and equipment and disclosed as a part
of mining properties. After initial recognition, the stripping
activity asset is depreciated on a unit of production method
over the expected useful life of the identified component of
the ore body.
In circumstances where a 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
Company determines that the mining property will not provide
sufficient and sustainable returns relative to the risks and the
Company 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.
ii) Oil and gas assets- (developing/producing assets)
For oil and gas assets a successful efforts based accounting
policy is followed. Costs incurred prior to obtaining the legal
rights to explore an area are expensed immediately to the
statement of profit and loss.
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
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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
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 statement of profit and loss when the asset is
derecognised. Major inspection and overhaul expenditure is
capitalized, if the recognition criteria are met.
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 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 or amortised.
• Mining properties
The capitalised mining properties are amortised on a
unit-of-production basis over the total estimated remaining
commercial proved and probable reserves of each property
or group of properties and are subject to impairment review.
Costs used in the unit of production calculation comprise
the net book value of capitalised costs plus the estimated
future capital expenditure required to access the commercial
reserves. Changes in the estimates of commercial reserves or
future capital expenditure are dealt with prospectively.
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
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.
• 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
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
estimated useful lives (determined by the management)
as given below.
Management’s assessment takes into account, inter alia,
the nature of the assets, the estimated usage of the assets,
the operating conditions of the assets, past history of
replacement and maintenance support.
Estimated useful lives of assets are as follows:
Asset
Buildings (Residential, factory etc.)
Plant and equipment
Railway siding
Office equipment
Furniture and fixture
Vehicles
Useful Life
(in years)
3-60
15-40
15
3-6
8-10
8-10
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. Subsequently, intangible assets
are measured 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 ranging from 0-5 years. Amounts paid for
securing mining rights are amortised over the period of the
mining lease ranging from 16-25 years.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the statement of profit and loss when the asset
is derecognised.
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 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. Drilling costs are written
off on completion of a well unless the results indicate that
hydrocarbon reserves exist and there is a reasonable prospect
that these reserves are commercial.
Following appraisal of successful exploration wells, if
commercial reserves are established and technical feasibility
for extraction demonstrated, then the related capitalised
exploration costs are transferred into a single field cost
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.
(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
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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 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 assesses 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. Internal and external factors, such as worse economic
performance than expected, changes in expected future
prices, costs and other market factors are also monitored to
assess for indications of impairment or reversal of previously
recognised impairment losses.
If any such indication exists 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.
262
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 indicators:
• the period for which the Company 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 Company 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 & subsequent
measurement
All financial assets are recognised initially at fair value plus, in
the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the
acquisition of the financial asset. Purchases or sales of financial
assets that require delivery of assets within a time frame
established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the
date that the Company 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
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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, interest income,
impairment losses and 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 statement of profit and 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 the 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 the 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 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:
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 115.
The Company follows ‘simplified approach’ for recognition
of impairment loss allowance on trade receivables, contract
assets and lease receivables.
The application of simplified approach does not require the
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.
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.
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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:
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 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(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, 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 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 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,
264
fair value gains/ losses attributable to changes in own
credit risk are recognized in OCI. These gains/ loss are not
subsequently transferred to 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 or loss.
• Financial liabilities at amortised cost (Loans & Borrowings
and Trade and Other payables)
After initial recognition, interest-bearing loans and
borrowings and trade and other payables are subsequently
measured at amortised cost using the EIR method.
Gains and losses are recognised in 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.
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.
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(vii) 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 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 statement of profit and 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 in 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.
(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.
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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 policy on the
general 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.
266
(J) Inventories
Inventories and work-in-progress are stated at the lower
of cost and net realisable value. Cost is determined on the
following basis:
• purchased copper concentrate is recorded at cost on a
first-in, first-out (”FIFO”) basis; all other materials including
stores and spares are valued on 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
weighted average basis (except copper business where
FIFO basis is followed) and
• By-products and scrap are valued at net realisable value.
Net realisable value is determined based on estimated
selling price, less further costs expected to be incurred to
completion and disposal.
(K) Government grants
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.
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.
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Subject to the exceptions below, deferred tax is provided,
using the balance sheet method, on all temporary differences
at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes and on carry forward of unused tax credits and
unused tax losses;
• deferred income tax is not recognised on initial recognition
of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction which
affects neither the accounting profit nor taxable profit (tax
loss); and
• deferred tax assets (including MAT credit entitlement) are
recognised only to the extent that it is more likely than not
that they will be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset
is 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 statement of profit and 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 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.
(M) Retirement benefit 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.
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 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 employee benefit expenses. Net interest
expense or income is recognized within 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 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 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.
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, VRL offered certain share based incentives
under the Long-Term Incentive Plan (“LTIP”) to employees and
directors of the Company. VRL 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.
(O) Provisions, contingent liabilities and contingent assets
The assessments undertaken in recognising provisions and
contingencies have been made in accordance with the
applicable Ind AS.
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
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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 Balance Sheet.
on the reporting date. Non-monetary assets and liabilities
denominated in other currencies and measured at historical
cost or fair value are translated at the exchange rates
prevailing on the dates on which such values were determined.
All exchange differences are included in the statement
of profit and loss except those where the 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.
Exchange differences which are regarded as an adjustment to
interest costs on foreign currency borrowings, are capitalized
as part of borrowing costs in qualifying assets.
Contingent assets are not recognised but disclosed in the
financial statements when an inflow of economic benefit is
probable.
The Company has significant capital commitments in relation
to various capital projects which are not recognised on the
balance sheet.
(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 provided
for at their net present value and 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 operations, 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 (`).
In the financial statements of the Company, 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
268
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 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
Previous 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.
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/ Suppliers’ 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
raw materials with a maturity of up to twelve months, the
economic substance of the transaction is determined to be
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
operating in nature and these are recognised as operational
buyers’ credit/ suppliers’ credit (under Trade 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 presented within borrowings in the balance sheet.
Interest expense on these are recognised in the finance cost.
(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. If any specific borrowing
remains outstanding after the related asset is ready for its
intended use or sale, that borrowing then becomes part of
general borrowing. Where the funds used to finance a project
form part of general borrowings, the amount capitalised is
calculated using a weighted average of rates applicable to
relevant general borrowings of the 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 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 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, 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
has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of
the investee, but is not control or joint control over
those policies.
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,
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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.
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 38(b)].
(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) 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 years. 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.
3(b) APPLICATION OF NEW STANDARDS AND
AMENDMENTS
(A) The Company has adopted with effect from April 01,
2018, the following new standards and amendments.
• Ind AS 115: Revenue from contracts with customers
The Company has adopted Ind AS 115 Revenue from
Contracts with Customers with effect from April 01, 2018
which 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. As per
the Company’s current revenue recognition practices,
transfer of control happens at the same point as transfer of
risk and rewards thus not effecting the revenue recognition.
The amount of revenue recognised reflects the consideration
to which the Company expects to be entitled in exchange for
those goods or services.
Under this standard, services provided post transfer of
control of goods are treated as separate performance
obligation and requires proportionate revenue to be
deferred along with associated costs and to be recognized
over the period of service. The Company provides
shipping and insurances services after the date of transfer
of control of goods and therefore has identified it as a
separate performance obligation. As per the result of
evaluation of contracts of the relevant revenue streams, it
is concluded that the impact of this change is immaterial
to the Company and hence no accounting changes have
been done.
The Company has products which are provisionally priced
at the date revenue is recognised. Revenue in respect of
such contracts are recognised when control passes to the
customer and is measured at the amount the entity expects
to be entitled – being the estimate of the price expected to be
received at the end of the measurement period. Post transfer
of control of goods, subsequent movements in provisional
pricing are accounted for 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 has been included in total
revenue from operations on the face of the Statement of
Profit and loss. The accounting for revenue under Ind AS 115
does not, therefore, represent a substantive change from the
Company’s previous practice for recognising revenue from
sales to customers.
Further, export incentives received from Government that
were included within ‘other operating revenue’ are now
included within ‘other operating income’.
The Company has adopted the modified transitional
approach as permitted by the standard under which
the comparative financial information is not restated.
The accounting changes required by the standard are not
having material effect on the recognition or measurement
270
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
of revenues and no transitional adjustment is recognised in
retained earnings at April 01, 2018. Additional disclosures as
required by Ind AS 115 have been included in these financial
statements.
Previous period accounting policy: 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”) and crude index, 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
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 rates arrived at based on the
principles laid down under the relevant Tariff Regulations as
notified by the regulatory bodies, as applicable.
• Amendment to Ind AS 23: Borrowing cost
The amendment clarifies that an entity considers any
borrowings made specifically for the purpose of obtaining
a qualifying asset as part of the general borrowings, when
substantially all of the activities necessary to prepare
that asset for its intended use or sale are complete.
The amendment is applicable to borrowing costs incurred
on or after the beginning of the annual reporting period
in which the entity first applies those amendments.
The amendment is efffective from April 01, 2019. Since this
amendment is clarificatory in nature, the Company has
applied the amendment prospectively from the current
reporting year i.e. for the borrowing costs incurred on or
after April 01, 2018.
Based on the Amendment, the Company has now
capitalized certain borrowing costs as general borrowings.
This has resulted in capitalization of interest expense
of ` 278 Crore for the year ended March 31, 2019 and
a corresponding increase in depreciation of ` 1 Crore.
The consequent incremental impact on net profit for the
year was ` 200 Crore and on the basic and diluted earnings
per share was ` 0.54/ share and ` 0.54/ share respectively.
The change did not have any significant impact on the
Company’s balance sheet and the statement of cash flows.
(B) 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 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.
I. Ind AS 116: Lease
Ind AS 116, Leases, replaces the existing standard on
accounting for leases, Ind AS 17, with effect from April 01,
2019. This standard introduces a single lessee accounting
model and requires a lessee to recognize a ‘right of use
asset’ (ROU) and a corresponding ‘lease liability’ for all leases.
Lease costs will be recognised in the statement of profit and
loss over the lease term in the form of depreciation on the
ROU asset and finance charges representing the unwinding of
the discount on the lease liability. In contrast, the accounting
requirements for lessors remain largely unchanged.
The Company acts as a lessee in lease arrangements mainly
involving office premises and other properties. The Company
has elected to apply the modified retrospective approach on
transition, and accordingly the comparative figures will not
be restated. For contracts in place at this date, the Company
will continue to apply its existing definition of leases under
current accounting standards (“grandfathering”), instead of
reassessing whether existing contracts are or contain a lease
at the date of application of the new standard. Further, as
permitted by Ind AS 116, the Company will not bring leases of
low value assets or short-term leases with 12 or fewer months
remaining on to balance sheet.
Transition to Ind AS 116 does not have a material effect on the
Company’s Financial Statements.
II. Amendments to standards
The following amendments are applicable to the Company
from April 01, 2019. The impacts of these are currently
expected to be immaterial:
Reference
Name / Brief
Annual Improvements
to Ind AS (2018)
The amendments comprise of changes in
Ind AS 103, Ind AS 111 and Ind AS 12
Ind AS 19
Ind AS 28
Ind AS 109
Ind AS 12
Employee benefits - Plan Amendment,
Curtailment or Settlement
Investments in Associates and Joint
Ventures - Long-term Interests in
Associates and Joint Ventures
Financial Instruments - Prepayment
Features with Negative Compensation
Income Taxes - Uncertainty over Income
Tax Treatments
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3(c) 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.
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:
(A) Significant Estimates
(i) Oil and 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 40(b).
Changes in reserves as a result of change in management
assumptions could impact the depreciation rates and the
carrying value of assets (refer note 5).
(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.
During the financial year ended March 31, 2018, the Company
had recognized impairment reversal (net) against exploration and
evaluation oil and gas assets. The details of impairment reversal
impact and the assumptions and sensitivities used are disclosed
in note 31. Carrying values of exploration and evaluation assets
are disclosed in note 5.
272
(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 or impairment reversal of previous recorded
impairment are identified in accordance with Ind AS 36.
During the financial year ended March 31, 2018, the Company
had recognised impairment reversal of its developing/
producing oil and gas assets in Rajasthan. During the current
year, an impairment reversal has been recorded in the oil
and gas assets in Krishna Godavari (KG) basin. The details
of impairment charge/reversal and the assumptions and
sensitivities used are disclosed in note 31.
In the current year, the management has reviewed the key
assumptions i.e. future production, oil prices, discount to
price, Production sharing contract (PSC) life, discount rates,
etc. for all of its oil and gas assets. Based on analysis of
events that have occurred since then, there did not exist
any indication that the assets may be impaired or previously
recorded impairment charge may reverse except for the
assets in KG basin. Hence, detailed impairment analysis has
not been conducted in the current financial year, except for
assets in KG basin.
Carrying values of oil & gas assets are disclosed in note 5.
(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 impairment charge/ reversal and the assumptions
used and carrying value are disclosed in note 31 and 5
respectively.
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(v) 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 the Company 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 had assessed the recoverable value of all its
assets and liabilities associated with existing mining leases
which led to a non-cash impairment charge in the financial
year ended March 31, 2018. There are no significant changes
subsequent to the financial year ended March 31, 2018.
Details of impairment charge and method of estimating
recoverable value is disclosed in note 31.
(vi) 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 an annual basis 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 statement of profit and
loss 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 22.
(vii) 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 22.
(viii) 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 6A. 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.
(ix) 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 (Refer note 32).
The details of MAT assets are set out in note 32.
(x) Copper operations in India
In an appeal filed by the Company against the closure order of
the Tuticorin Copper smelter by Tamil Nadu Pollution Control
Board (“TNPCB”), the appellate authority National Green Tribunal
(“NGT”) passed an interim order on May 31, 2013 allowing the
copper smelter to recommence operations and appointed an
Expert Committee to submit a report on the plant operations.
Post the interim order, the plant recommenced operations
on June 23, 2013. Based on Expert Committee’s report on
the operations of the plant stating that the plant’s emission
were within prescribed standards and based on this report,
NGT ruled on August 08, 2013 that the Copper smelter could
continue its operations and recommendations made by the
Expert Committee be implemented in a time bound manner.
The Company has implemented all of the recommendations.
TNPCB has filed an appeal against the order of the NGT before
the Supreme Court of India.
In the meanwhile, the application for renewal of Consent
to Operate (CTO) for existing copper smelter, required as
per procedure established by law was rejected by TNPCB
in April 2018. The Company has filed an appeal before the
TNPCB Appellate Authority challenging the Rejection Order.
During the pendency of the appeal, there were protests by a
section of local community raising environmental concerns
and TNPCB vide its order dated May 23, 2018 ordered closure
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 273
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
of existing copper smelter plant with immediate effect.
Further, the Government of Tamil Nadu, issued orders dated
May 28, 2018 with a direction to seal the existing copper
smelter plant permanently. The Company believes these
actions were not taken in accordance with the procedure
prescribed under applicable laws. Subsequently, the Directorate
of Industrial Safety and Health passed orders dated May 30,
2018, directing the immediate suspension and revocation of the
Factory License and the Registration Certificate for the existing
smelter plant.
Separately, the Company has filed a fresh application for
renewal of the Environmental Clearance for the proposed
Copper Smelter Plant 2 (Expansion Project) dated March 12,
2018 before the Expert Appraisal Committee of the MoEF
wherein a sub-committee was directed to visit the Expansion
Project site prior to prescribing the Terms of Reference.
In the meantime, the Madurai Bench of the High Court of
Madras in a Public Interest Litigation held vide its order
dated May 23, 2018 that the application for renewal of the
Environmental Clearance for the Expansion Project shall
be processed after a mandatory public hearing and in the
interim, ordered the Company to cease construction and all
other activities on site for the proposed Expansion Project
with immediate effect. The Ministry of Environment and
Forests (MoEF) has delisted the expansion project since the
matter is sub judice. Separately, SIPCOT vide its letter dated
May 29, 2018, cancelled 342.22 acres of the land allotted
for the proposed Expansion Project. Further the TNPCB
issued orders on June 7, 2018 directing the withdrawal of the
Consent to Establish (CTE) which was valid till March 31, 2023.
The Company has approached Madras High Court by way of
writ petition challenging the cancellation of lease deeds by
SIPCOT pursuant to which an interim stay has been granted.
The Company has also filed Appeals before the TNPCB
Appellate Authority challenging withdrawal of CTE by the
TNPCB, the matter is pending for adjudication.
The Company has appealed this before the National Green
Tribunal (NGT). NGT vide its order on December 15, 2018 has
set aside the impugned orders and directed the TNPCB to pass
fresh orders for renewal of consent and authorization to handle
hazardous substances, subject to appropriate conditions for
protection of environment in accordance with law.
The State of Tamil Nadu and TNPCB approached Supreme
Court in Civil Appeals on January 02, 2019 challenging
the judgment of NGT dated December 15, 2018 and the
previously passed judgment of NGT dated August 08, 2013.
The Supreme Court vide its judgment dated February 18, 2019
set aside the judgments of NGT dated December 15, 2018
and August 08, 2013 on the basis of maintainability alone.
The Company has also filed a writ petition before Madras
High Court challenging the various orders passed against
the Company in 2018 and 2013. The case was heard on 01
March 2019 wherein the Company pressed for interim relief
for care and maintenance of the plant. The Madras High Court
has directed the State of Tamil Nadu and TNPCB to file their
counter to our petition for interim relief.
The Company is taking appropriate legal measures to
address the matters.
Even though there can be no assurance regarding the final
outcome of the process and the timing of such process in
274
relation to the approval for the expansion project, as per the
Company’s assessment, it is in compliance with the applicable
regulations and expects to get the necessary approvals in
relation to the existing operations and the expansion project
and is not expecting any material loss on this account.
The carrying value of the assets under operation and under
expansion as at March 31, 2019 and March 31, 2018 is
` 2,385 Crore and ` 1,046 Crore respectively.
The Company has carried out an impairment analysis
considering the key variables and concluded that there
exists no impairment. The Company has done an additional
sensitivity with a delay in commencement of operations both
at the existing and expansion plants by two years and noted
that the recoverable amount of the assets would still be in
excess of their carrying values.
(xi) PSC Extension
Rajasthan Block
On October 26, 2018, the Government of India (GoI), acting
through the Directorate General of Hydrocarbons (DGH) has
granted its approval for a ten-year extension of the Production
Sharing Contract (PSC) for the Rajasthan Block (RJ), with effect
from May 15, 2020 subject to certain conditions. The GoI has
granted the extension under the Pre-NELP Extension Policy,
the applicability whereof to PSC for RJ is sub-judice and
pending before the Hon’ble Delhi High Court. To address two
of the conditions stated by DGH, the Company has taken the
following steps:
• Submission of Audited Accounts and End of year statement:
The Company and one of the joint venture partners have
divergent views on the cost oil entitlement and therefore
the End of Year statement for the year ended March 31,
2018 and Investment Multiple as at March 31,2018 could
not be finalized. To resolve this, the Company has initiated
arbitration proceedings against the joint venture partner.
Consequentially, profit petroleum pertaining to the said
Block for the year ended March 31, 2019 and applicable
Investment Multiple calculated based on management’s
cost oil computation (resulting into Government’s share of
profit petroleum @ 40% for DA-1 & DA-2 and @20% for DA-3
for FY 2018-19), remains provisional. The computation is
after considering relevant independent legal advice.
• Profit Petroleum: DGH has raised a demand for the period
upto March 31, 2017 for Government’s additional share of
Profit Oil based on its computation of disallowance of cost
incurred over the initially approved Field Development Plan
(FDP) of pipeline project and retrospective allocation of
certain common costs between Development Areas (DAs) of
Rajasthan Block. The Company believes that it has sufficient
as well as reasonable basis (pursuant to PSC provisions &
approvals) for having claimed such costs and for allocating
common costs between different DAs and has responded
to the government accordingly. Company’s view is also
supported by an independent legal opinion.
Pursuant to the aforesaid approval of October 26, 2018,
the Company has recomputed its reserves till 2030 and has
reclassified exploration costs of ` 4,071 Crore to property
plant and equipment and ` 3,362 Crore to capital work in
progress. This has led to a reduction in depletion charge
of ` 94 Crore for the period from October 26, 2018 till
March 31, 2019.
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Ravva Block
The Government of India has granted its approval for a
ten-year extension of PSC for Ravva Block with effect from
October 28, 2019, subject to certain conditions. The extension
has been granted with a 10% increase in GOI share of profit oil.
Management has reviewed the conditions and is confident of
fulfilling or disposing of such conditions.
The Company does not expect any material adjustment to the
financial statements on account of the aforesaid matters.
(B) Significant Judgement
(i) 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 past events and 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 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 Company does not
expect them to have a materially adverse impact on the
Company’s financial position or profitability. These are set
out in Note 35.
(ii) Revenue recognition and receivable recovery in relation
to the power division
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 115 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 the claims. In addition the fact that the contracts
are with government owned companies implies the credit risk
is low [Refer note 7(c)]
(iii) 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. The details of
exceptional items are set out in note 31.
4. SEGMENT INFORMATION
Description of segment and principal activities
The Company is a diversified natural resource company
engaged in exploring, extracting and processing minerals and
oil and gas. The Company produces oil and gas, aluminium,
copper, iron ore and power. The Company has five reportable
segments: oil and gas, aluminium, copper, iron ore and power.
The management of the Company is organized by its main
products: oil and gas, aluminium, copper, iron ore 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”).
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. Earnings before Interest, Tax and Depreciation &
Amortisation (EBITDA) are evaluated regularly by the CODM,
in deciding how to allocate resources and in assessing
performance. The operating segments reported are the
segments of the Company for which separate financial
information is available. 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.
Pricing 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, 2019, 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 and liabilities information regarding the
Company’s business segments as at and for the year ended
March 31, 2019 and March 31, 2018 respectively.
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I) For the year ended March 31, 2019
Particulars
Revenue
External revenue a
Inter segment revenue
Segment revenue
Results
EBITDA b
Depreciation, depletion and amortisation expense
Other income c
Segment Results
Less: Unallocated expenses
Less: Finance costs
Add: Other income (excluding exchange difference
and deferred grant)
Add: Net exceptional gain
Net profit before 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
Income tax liabilities (net)
Others
Total Liabilities
Capital Expenditure d
Impairment reversal/(charge) - net / provision e
Oil and Gas
Aluminium
Copper
Iron Ore
Power
Eliminations
Total
Business Segments
(` in Crore)
7,104
-
7,104
21,000
-
21,000
6,833
-
6,833
2,909
2
2,911
4,119
1,531
-
2,588
1,246
1,285
53
14
(214)
197
2
(409)
622
105
6
523
252
-
252
(195)
125
11
(309)
16,299
45,101
7,141
2,927
3,321
-
6,961
17,499
3,743
1,235
162
2,274
261
1,199
-
291
-
37
-
2
-
-
(2)
(2)
38,098
-
38,098
-
-
-
-
5,578
3,243
72
2,407
70
3,757
6,043
324
4,947
74,789
68,582
2,175
3,891
1,430
1,50,867
29,600
42,204
46
1,137
72,987
3,806
265
a) Export incentive has been reclassified from ‘segment revenue’ to ‘other operating income’. Refer note 2(b).
b) EBITDA is a non-GAAP measure
c) Amorisation of duty benefits relating to assets recognised as government grant.
d) Total Capital expenditure includes capital expenditure of ` 3 Crore not allocable to any segment.
e) Total of Impairment reversal/(charge) - net / provision includes net impairment reversal on investment in subsidiaries of `4 Crore
not allocable to any segment.
276
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS II) For the year ended March 31, 2018
Particulars
Oil and Gas
Aluminium
Copper
Iron Ore
Power
Eliminations
Total
Business Segments
(` in Crore)
Revenue
External revenue a
Inter segment revenue
Segment revenue
Results
EBITDA b
Depreciation, depletion and amortisation expense d
Other income c
Segment Results
Add: Unallocated income d
Less: Finance costs
Add: Other income (excluding exchange difference
and deferred grant)
Add: Net exceptional gain
Net profit before tax
Other information
Segment Assets
Financial asset investments
Income tax assets
Cash & Cash Equivalents (Including other bank
balances & bank deposits)
Others
Total Assets
Segment Liabilities
Borrowings
Income tax liabilities (net)
Deferred tax liabilities (net)
Others
Total Liabilities
Capital Expenditure e
Impairment reversal/(charge) - net / provision f
5,085
-
5,085
15,600
-
15,600
21,253
-
21,253
3,146
16
3,162
2,909
1,013
-
1,896
1,891
1,379
49
561
1,103
201
3
905
401
120
6
287
412
-
412
44
122
11
(67)
-
(16)
(16)
45,496
-
45,496
-
-
-
-
6,348
2,835
69
3,582
98
3,353
3,490
5,407
9,224
72,593
68,010
2,429
1,594
12,842
43,426
9,968
3,094
3,263
-
-
3,755
-
11,919
-
8,667
-
1,558
-
275
609
3,513
1,318
(251)
540
-
70
(452)
-
-
2,543
- 1,47,169
26,174
-
40,713
45
26
898
67,856
2,548
5,520
-
-
-
a) Export incentive has been reclassified from ‘segment revenue’ to ‘other operating income’. Refer note 2(b).
b) EBITDA is a non-GAAP measure
c) Amorisation of duty benefits relating to assets recognised as government grant.
d) Depreciation, depletion and amortisation expense excludes and unallocated income is net of unallocated
deprection of ` 7 Crore.
e) Total Capital expenditure includes capital expenditure of ` 11 Crore not allocable to any segment.
f) Total of Impairment reversal/(charge) - net / provision includes impairment reversal on investment in subsidiaries of ` 2,710
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, 2019
Year ended
March 31, 2018
19,636
1,797
41
3,875
12,749
38,098
21,933
6,836
2,766
3,897
10,064
45,496
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 277
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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:
Carrying Amount of Segment Assets
India
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
61,939
61,939
60,551
60,551
Information about major customers
Revenue from one customer amounted to ` 5,077 Crore (March 31, 2018 : ` 1,687 Crore), arising from sales made in the
Aluminium and Copper segment.
Disaggregation of revenue
Below table summarises the disaggregated revenue from contract with customers :
Particulars
Oil
Gas
Aluminium products
Copper Cathode
Iron Ore
Metallurgical coke
Pig Iron
Power
Others
Revenue from contracts with customers
Gains/(losses) from provisionally priced contracts
Total Revenue
(` in Crore)
Year ended
March 31, 2019
6,763
300
19,328
5,375
693
57
2,062
299
3,234
38,111
(13)
38,098
278
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 279
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Intangible Assets
Particulars
Gross Block
As at April 1, 2017
Additions
Disposals/ Adjustments
Exchange differences
As at April 1, 2018
Additions
Transfers from Property,Plant and Equipment
Disposals/ Adjustments
Exchange differences
As at March 31, 2019
Accumulated amortisation and impairment
As at April 1, 2017
Charge for the year
Disposals/ Adjustments
Impairment charge/(reversal) for the year (note 31)
Exchange differences
As at April 1, 2018
Charge for the year
Disposals/ Adjustments
Transfers from Property,Plant and Equipment
Exchange differences
As at March 31, 2019
Net Book Value
As at April 1, 2017
As at April 1, 2018
As at March 31, 2019
Software License
Mining Rights
(` in Crore)
Total
222
25
(1)
1
247
13
1
(4)
9
266
195
18
(1)
-
0
212
22
(3)
1
8
240
27
35
26
227
-
-
-
227
-
-
-
-
227
99
12
-
107
-
218
1
-
-
-
219
128
9
8
449
25
(1)
1
474
13
1
(4)
9
493
294
30
(1)
107
0
430
23
(3)
1
8
459
155
44
34
Notes
a) Plant and equipment include refineries, smelters, power plants, railway sidings, ships, aircrafts, river fleet and related facilities.
b) During the year ended March 31, 2019, interest capitalised was ` 567 Crore (March 31, 2018: ` 349 Crore).
c) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been
described in Note 17 on “Borrowings”.
d) 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 ` 2 Crore loss (March 31,
2018: ` 1 Crore gain) is adjusted to the cost of respective item of property, plant and equipment.
Capital work-in-progress includes foreign currency exchange loss of Nil incurred during the year (March 31, 2018:
` 17 Crore loss) on such long term foreign currency monetary liabilities.
e) Property,Plant and Equipment, Capital work-in-progress and exploration and evaluation assets net block includes share of
jointly owned assets with the joint venture partners ` 12,211 Crore (March 31, 2018: ` 11,151 Crore). Refer note 3(c)(A)(xi) for
reasons for transfer of exploration and evaluation assets to property, plant and equipment and capital work-in-progress.
280
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
f) 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 and Intangibles schedule
Less: Cost allocated to joint ventures
As per Statement of Profit and Loss
( ` in Crore)
For the year ended
March 31, 2019
For the year ended
March 31, 2018
3,248
23
3,271
(28)
3,243
2,839
30
2,869
(27)
2,842
g) Freehold Land includes gross block of ` 129 Crore (March 31, 2018: ` 119 Crore), accumulated amortisation of ` 112 Crore
(March 31, 2018: ` 95 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective
Oil and Gas blocks.
6. FINANCIAL ASSETS- INVESTMENTS
A) Non Current Investments
Particulars
(a) Investment in equity shares - at cost/
deemed cost a
Subsidiary companies
Quoted
- Hindustan Zinc Limited, of ` 2/-each b
Unquoted
As at March 31, 2019
As at March 31, 2018
No.
Amount
(` in Crore)
No.
Amount
(` in Crore)
2,74,31,54,310
44,398 2,74,31,54,310
44,398
- Bharat Aluminium Company Limited, of ₹
11,25,18,495
553
11,25,18,495
553
` 10/- each (including 5 shares held jointly
with nominees) b
- Monte Cello BV, Netherlands, of Euro 453.78
40
204
40
204
each
Less: Reduction pursuant to merger c
- Sterlite (USA) Inc., of US$.01 per share
100
(` 42.77 at each year end)
(204)
0
0
(204)
100
0
0
- Cairn India Holdings Limited (CIHL) of GBP 1
42,08,10,062
28,873
42,08,10,062
28,873
each, fully paid up
Less: Reduction pursuant to merger c
(15,067)
13,806
(15,067)
13,806
- Vizag General Cargo Berth Private Limited, of
` 10 each (including 6 shares held jointly with
nominees)
3,21,08,000
32
3,21,08,000
- Paradip Multi Cargo Berth Private Limited, of
10,000
` 10 each (including 6 shares held jointly with
nominees)
- Sterlite Ports Limited of ` 2 each (including 6
2,50,000
shares held jointly with nominees)
0
0
10,000
2,50,000
- Talwandi Sabo Power Limited, of ` 10 each
3,20,66,09,692
3,207 3,20,66,09,692
(including 6 shares held jointly with nominees)
- Sesa Resources Limited, of ` 10 each c
12,50,000
757
12,50,000
- Bloom Fountain Limited, of US$ 1 each
2,20,10,00,001
14,734
2,20,10,00,001
14,734
32
0
0
3,207
757
Less: Reduction pursuant to merger c
(14,320)
414
(14,320)
414
- MALCO Energy Limited, of ` 2 each (including
2,33,66,406
116
2,33,66,406
116
6 shares held jointly with nominees)
Less: Reduction pursuant to merger c
- THL Zinc Ventures Limited of US$ 100 each
1,00,001
Less: Reduction pursuant to merger c
- THL Zinc Holdings BV of EURO 1 each
37,38,000
Less: Reduction pursuant to merger c
(23)
46
(46)
23
(23)
93
0
0
1,00,001
37,38,000
(23)
46
(46)
23
(23)
93
0
0
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 281
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Particulars
No.
- Vedanta Star Limited of ` 10 each (including
1,96,17,256
Amount
(` in Crore)
1,770
No.
-
As at March 31, 2019
As at March 31, 2018
6 shares held jointly with nominees) g
Associate companies - unquoted
- Gaurav Overseas Private Limited, of ` 10 eachd
Joint venture - unquoted
3,23,000
0
3,23,000
- Rampia Coal Mines and Energy Private
2,72,29,539
2
2,72,29,539
Amount
(` in Crore)
-
0
2
Limited of ` 1 each
Investment in equity shares at fair value
through other comprehensive income
Quoted
- Sterlite Technologies Limited, of ` 2 each
(including 60 shares held jointly with
nominees)
Unquoted
- Sterlite Power Transmission Limited, of ` 2
each (including 12 shares held jointly with
nominees)
47,64,295
104
47,64,295
149
9,52,859
11
9,52,859
11
0
907
215
0
0
0
0
0
- Goa Shipyard Limited of ` 10 each
2,50,828
0
2,50,828
(b) Investment in preference shares of
subsidiary companies - at cost
Subsidiary companies – Unquoted
- Bloom Fountain Limited, 0.25% Optionally
18,59,900
907
18,59,900
Convertible Redeemable Preference shares of
US$ 1 each
- Bloom Fountain Limited, 0.25% Optionally
3,60,500
215
3,60,500
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 c
70,00,000
3,187
70,00,000
3,187
- THL Zinc Holdings BV, 0.25% Optionally
55,00,000
Convertible Redeemable Preference shares
of EURO 1 each
Less: Reduction pursuant to merger c
(c) Investment in Government or Trust
securities at cost / amortised cost
- 7 Years National Savings Certificates (March
31, 2019: ` 35,450 March 31, 2018: ` 35,450)
(Deposit with Sales Tax Authority)
-
- UTI Master gain of ` 10 each (March 31, 2019:
100
` 4,072, March 31, 2018: ` 4,072)
- Vedanta Limited ESOS Trust (March 31, 2019:
-
(3,187)
2,495
(2,495)
0
0
0
0
0
55,00,000
(3,187)
2,495
(2,495)
-
100
-
` 5,000, March 31, 2018: ` 5,000)
(d) Investments in debentures of subsidiary
companies at cost / amortised cost
- Vizag General Cargo Berth Private Limited,
0.1% compulsorily convertible debentures
of ` 1,000 each e
15,00,000
150
15,00,000
149
- MALCO Energy Limited, compulsorily
6,13,54,483
6,136
6,13,54,483
6,136
convertible debentures of ` 1,000 each f
Less: Reduction pursuant to merger c
(e) Investments in Co-operative societies at fair
value through profit and loss
- Sesa Ghor Premises Holders Maintenance
Society Limited, of ` 200 each (March 31,
2019: ` 4,000, March 31, 2018: ` 4,000)
282
(6,118)
18
(6,118)
18
40
0
40
0
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS As at March 31, 2019
As at March 31, 2018
Particulars
- Sesa Goa Sirsaim Employees Consumers Co-
operative Society Limited, of ` 10 each (March
31, 2019: ` 2,000 March 31, 2018: ` 2,000)
- Sesa Goa Sanquelim Employees Consumers
Co- operative Society Limited, of ` 10 each
(March 31, 2019: ` 2,300 March 31, 2018:
` 2,300)
No.
200
230
- Sesa Goa Sonshi Employees Consumers Co-
468
450
500
40
operative Society Limited, of ` 10 each
(March 31, 2019: ` 4,680 March 31, 2018:
` 4,680)
- Sesa Goa Codli Employees Consumers Co-
operative Society Limited, of ` 10 each (March
31, 2019: ` 4,500, March 31, 2018: ` 4,500)
- Sesa Goa Shipyard Employees Consumers
Co-operative Society Limited, of ` 10 each
(March 31, 2019: ` 5,000 March 31, 2018: ₹
` 5,000)
- The Mapusa Urban Cooperative Bank Limited,
of ` 25 each (March 31, 2019: ` 1,000, March
31, 2018: ` 1,000)
Less: Provision for diminution in value of
investments in:
Cairn India Holdings Limited (CIHL)
(Refer note 31)
Bloom Fountain Limited
Sesa Resources Limited (Refer note 31)
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
No.
200
230
468
450
500
40
Amount
(` in Crore)
0
0
0
0
0
0
-
(1,536)
(696)
(2)
64,204
(2,234)
44,502
76,048
19,702
Amount
(` in Crore)
0
0
0
0
0
0
(52)
(1,536)
(648)
(2)
62,473
(2,238)
44,547
82,704
17,926
a. Carrying value of investment in equity shares of Hindustan
Zinc Limited is at deemed cost and for all other subsidiaries, it
is at the cost of acquisition.
b. 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
provides 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 to be notified. The Government of India without
prejudice to the position on the Put / Call option issue has
received approval from the Cabinet for divestment and the
Government is looking to divest through the auction route.
Meanwhile, the Supreme Court has, in January 2016, directed
status quo pertaining to disinvestment of Government of
India’s residual shareholding in a public interest petition filed
which is currently pending and sub-judice.
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 “tag along” 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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 283
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 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 August 02,
2019. Meanwhile, the Government of India without prejudice
to its position on the Put / Call option issue has received
approval from the Cabinet for divestment and the Government
is looking to divest through the auction route.
On 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. Reduction pursuant to merger of Cairn India Limited with
Vedanta Limited accounted for in the year ended March 31, 2017.
d. During the previous 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 previous year, the maturity of investments in
compulsorily convertible debentures of Vizag General Cargo
Berth Private Limited has been extended by 2 years 10 months
till January 28, 2021.
f. During the previous 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 an
premium of ` 900/- each.
g. On April 23, 2018, Vedanta Star Limited was incorporated
as a 100% subsidiary of the Company. The Company has
made an investment of ` 1,770 Crore in 1,77,50,000 equity
shares having face value of ` 10 each including 6 shares
held by nominees. Further during the year, 18,67,256 shares
were issued as bonus shares. Vedanta Star Limited in turn has
acquired the controlling stake in Electrosteel Steels Limited.
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
1,229
1,310
1,733
106
4,378
3,068
1,310
1,761
1,835
1,819
122
5,537
3,702
1,835
(` in Crore)
Total
2,960
(521)
2,439
B) Current Investment
Particulars
Investments carried at fair value through profit and loss
Investment in mutual funds- quoted
Investment in mutual funds- unquoted
Investment in bonds - quoted
Investment in India Grid Trust - quoted a
Total
Aggregate amount of quoted investments, and market value thereof
Aggregate amount of unquoted investments
(a) Represents investment in related party (Refer note 36).
7. FINANCIAL ASSETS - TRADE RECEIVABLES
Particulars
Unsecured
Less: Provision for expected credit loss
Total
As at March 31, 2019
As at March 31, 2018
Non-current
1,745
(497)
1,248
Current
1,994
(28)
1,966
Total
Non-current
3,739
(525)
3,214
662
(191)
471
Current
2,298
(330)
1,968
(a) The interest free credit period given to customers is upto 90 days. Also refer note 20(C)(d)
(b) For amounts due and terms and conditions relating to related party receivables see note 36.
(c) Additionally, as at March 31, 2018, ` 767 Crore was outstanding on account of certain disputes relating to computation
of tariffs and differential revenues recognised with respect to tariffs pending finalisation by the Odisha State Regulatory
Commission. During the current year the said disputes were settled. However, the customer has raised certain claims on the
Company in respect of short supply of power for which a provision of ` 218 Crore has been made. A Minutes of Meeting
(MOM) has been signed with the customer and subsequently the Company has received payment of ` 55 Crore in March 2019.
Pending ratification of MOM by Odisha Electricity Regulatory Commission (OERC) and adjudication on certain issues related to
the claim, the customer has withheld ` 1,248 Crore, which the Company is confident of recovering.
284
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 8. FINANCIAL ASSETS - LOANS
Particulars
Unsecured, considered good
Loans to related parties (Refer note 36)
Loan to employees
Others
Total
9. FINANCIAL ASSETS - OTHERS
As at March 31, 2019
As at March 31, 2018
Non-current
Current
Total
Non-current
Current
197
-
-
197
114
1
3
118
311
1
3
315
-
-
-
-
9
2
3
14
As at March 31, 2019
As at March 31, 2018
Particulars
Site restoration asset a
Unsecured, considered good
Security deposits
Dividend receivable
Advance recoverable (Oil and Gas
Business)
Others b
Receivable from related parties
(Refer note 36)
Unsecured, considered credit
impaired
Security deposits
Others b
Less: Provision for expected credit loss
Total
Non-current
365
82
-
-
172
-
15
-
(15)
619
Current
-
10
-
2,382
36
202
1
232
(233)
2,630
Total
365
Non-current
318
92
-
2,382
208
202
16
232
(248)
3,249
125
-
-
-
-
15
-
(15)
443
Current
-
12
1,646
936
302
107
6
177
(183)
3,003
(` in Crore)
Total
9
2
3
14
(` in Crore)
Total
318
137
1,646
936
302
107
21
177
(198)
3,446
(a) Site restoration asset earns interest at fixed rate based on respective deposit rate.
(b) Others include claims receivables, and unbilled revenue (contract assets). The outstanding balance of contract assets was
` 23 Crore (March 31, 2018: ` 237 Crore)
10. OTHER ASSETS
Particulars
Unsecured, considered good
Capital advances
Advances other than capital
advances
Advances for related party supplies
(Refer note 36)
Advances for supplies
Others
Balance with government
authorities a,b
Leasehold land prepayments c
Loan to employee benefit trust
Others d
Unsecured, considered doubtful
Capital advances
Balance with government authorities
Advance for supplies
Others d
Less : Provision for doubtful
advances
Total
As at March 31, 2019
As at March 31, 2018
Non-current
Current
Total
Non-current
Current
Total
(` in Crore)
1,381
-
1,381
1,286
-
1,286
-
-
416
215
351
664
6
3
-
211
(220)
117
972
350
2
-
530
-
-
37
4
(41)
117
972
766
217
351
1,194
6
3
37
215
(261)
-
-
420
202
236
433
6
3
-
217
(226)
455
455
1,280
1,280
526
2
-
601
-
-
37
4
(41)
946
204
236
1,034
6
3
37
221
(267)
3,027
1,971
4,998
2,577
2,864
5,441
(a) Includes ` 30 Crore (March 31, 2018: ` 30 Crore), being Company’s share of gross amount of ` 86 Crore (March 31, 2018: ` 86
Crore) paid under protest on account of Education Cess and Secondary Higher Education Cess for the FY 2014.
(b) Includes ` 9 Crore (March 31, 2018: ` 48 Crore), being Company’s share of gross amount of ` 26 Crore (March 31, 2018:
` 139 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.
(d) Others include claim receivables, advance recoverable (oil and gas business), prepaid expenses and export incentive receivables.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 285
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
11. 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, 2019
3,024
1,154
(` in Crore)
As at
March 31, 2018
3,008
1,887
1,195
1,811
880
440
413
547
4
7,657
364
284
377
384
34
8,149
(a) For method of valuation for each class of inventories, refer note 3(a)(J).
(b) Inventory held at net realisable value amounted to ` 3,584 Crore (March 31, 2018: ` 90 Crore).
(c) The write down of inventories amounting to ` 152 Crore (March 31, 2018: ` 42 Crore) has been charged to the Statement of
Profit and Loss.
12. CURRENT FINANCIAL ASSETS - CASH AND CASH EQUIVALENTS
Particulars
Balances with banks
Deposits with original maturity of less than 3 months (including interest accrued thereon) a
Cash on hand
Total
(a) Bank deposits earns interest at fixed rate based on respective deposit rate.
(b) Cash & Cash equivalents for the purpose of Statement of Cash Flows 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 of more than 12 months (including interest accrued thereon) a,b
Bank deposits with original maturity of more than 3 months but less than 12 months (including interest
accrued thereon) a,c
Earmarked unpaid dividend accounts d
Earmarked escrow account e
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
3,026
183
0
3,209
1,144
-
0
1,144
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
3,209
75
3,284
1,144
87
1,231
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
3
602
75
2
682
8
355
87
-
450
(a) Bank deposits earns interest at fixed rate based on respective deposit rate.
(b) Includes Nil Crore (March 31, 2018 : ` 8 Crore) on lien with banks.
(c) Includes ` 591 Crore (March 31, 2018 : ` 193 Crore) on lien with banks and margin money ` 11 Crore (March 31, 2018 :
` 39 Crore).
(d) Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed or unpaid dividend.
(e) Earmarked escrow account is restricted in use as it relates to unclaimed redeemable preference shares.
286
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
14. SHARE CAPITAL
Particulars
A. Authorised equity share capital
Opening and Closing balance [equity shares of `1 each with
voting rights]
Authorised preference share capital a
Opening and Closing balance [preference shares of `10/- each]
B.
Issued, subscribed and paid up
Equity shares of ` 1/- each with voting rights b,c
As at March 31, 2019
As at March 31, 2018
Number
(in Crore)
Amount
(` in Crore)
Number
(in Crore)
Amount
(` in Crore)
4,402
4,402
4,402
4,402
301
3,010
301
3,010
372
372
372
372
372
372
372
372
(a) Redeemable preference shares of ` 3,010 Crore were redeemed on October 27, 2018 i.e. 18 months from the date of
allotment as per the scheme of amalgamation of Cairn India Limited with Vedanta Limited. An equivalent amount of ` 3,010
Crore has been transferred from general reserve to preference share redemption reserve.
(b) Includes 3,08,232 (March 31, 2018: 3,08,232) equity shares kept in abeyance. These shares are not part of listed equity
capital and pending allotment as they are sub-judice.
(c) Includes 1,49,98,702 (March 31, 2018: 92,33,871) equity shares held by Vedanta Limited ESOS Trust (Refer note 25).
C. Shares held by the 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, 2019
As at March 31, 2018
No. of
Shares held
(in Crore)
128.01
9.93
40.15
4.43
3.82
186.34
% of
holding
34.44
2.67
10.80
1.19
1.03
50.13
No. of
Shares held
(in Crore)
128.01
9.93
40.15
4.43
3.82
186.34
% of
holding
34.44
2.67
10.80
1.19
1.03
50.13
* The % of holding has been calculated on the issued and subscribed share capital as at the 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”).
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)*
*These were redeemed on October 27, 2018
E. Details of shareholders holding more than 5% shares in the Company *
(in Crore)
As at
March 31, 2019
As at
March 31, 2018
75
301
75
301
Particulars
As at March 31, 2019
As at March 31, 2018
Twin Star Holdings Limited
Twin Star Holdings Limited #
Finsider International Company Limited
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
34.44
2.67
10.80
* The % of holding has been calculated on the issued and subscribed share capital as at the 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 2018-19 287
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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.
During the year, on redemption of preference share, ` 3,010
Crore has been transferred from general reserve to preference
share redemption reserve.
d) Capital reserve: The balance in capital reserve has
mainly arisen consequent to merger of Cairn India Limited
with the Company.
16. 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 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.
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 had 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 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 at March 31, 2019 - 24,87,79,452
equity shares were held in the form of 6,21,94,863 ADS
(March 31, 2018- 24,84,24,696 equity shares in form of
6,21,06,174 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 2,01,305 equity shares (March 31, 2018:
204,525 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.
15. 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.
288
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
The following table summarizes the capital of the Company:
Particulars
Cash and cash equivalents (Refer note 12)
Other bank balances (Refer note 13)
Current investments (Refer note 6B)
Total cash (a)
Non-current borrowings (Refer note 17A)
Current borrowings (Refer note 17B)
Current maturities of long term debt (Refer note 19)
Total borrowings (b)
Net debt c=(b-a)
Total equity
Total capital (equity + net debt) (d)
Gearing ratio (times) (c/d)
17. FINANCIAL LIABILITIES - BORROWINGS
A) Non- current borrowings
Particulars
At amortised cost
Secured
Non convertible debentures
Rupee term loan from banks
Unsecured
Deferred sales tax liability
Redeemable preference shares
Non current Borrowings (A)
Less: Current maturities of long term debt (Refer note 19)
Total Non current borrowings (Net)
Current borrowings (B) (Refer note 17B)
Total borrowings (A+B)
B) Current 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
Commercial paper
Packing credit in foreign currencies from banks
Working capital loan
Amounts due on factoring
Total
(` in Crore except otherwise stated)
As at
March 31, 2019
As at
March 31, 2018
3,209
682
4,378
8,269
20,521
17,180
4,503
42,204
33,935
77,880
1,144
450
5,537
7,131
14,810
18,320
7,583
40,713
33,582
79,313
1,11,815
1,12,895
0.30
0.30
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
9,898
15,037
87
2
25,024
(4,503)
20,521
17,180
42,204
8,600
10,692
91
3,010
22,393
(7,583)
14,810
18,320
40,713
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
16
715
-
360
14,555
492
325
717
127
477
636
-
14,815
2,105
95
65
17,180
18,320
The Company has discounted trade receivables on recourse basis of ` 1,077 Crore (March 31, 2018: ` 65 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 reinstated on account of foreign exchange fluctuation.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 289
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT a) Details of Non-convertible debentures issued by the Company have been provided below (Carrying Value):
Particulars
8.75% due September 2021
9.18% due July 2021
8.50% due June 2021
8.75% due April 2021
8.50% due April 2021
7.80% due December 2020
9.45% due August 2020
8.70% due April 2020
7.95% due April 2020*
7.50% due November 2019
8.25% due October 2019
8.65% due September 2019
7.60% due May 2019
9.17% due July 2018
9.10% due April 2018
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
250
1,000
1,649
250
2,349
500
2,000
600
300
200
300
150
350
-
-
9,898
250
-
-
250
-
500
2,000
600
300
200
300
150
350
1,200
2,500
8,600
* 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
b) 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 and financial institution. The details of
security provided by the Company to various lenders on the assets of the Company are as follows:
Particulars
Secured long term borrowings
Secured short term borrowings
Total secured borrowings
Facility Category
Project Buyers’
credit from
banks
Working
capital loans*
Security details
Secured by exclusive charge on the assets of Vedanta Limited’s aluminium division at
Jharsuguda imported under facility and first charge on Jharsuguda aluminium’s current
assets on pari passu basis
Other secured project buyer’s credit
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 Vedanta Limited, 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)
First charge on the entire current assets of Vedanta Limited, present and future, on pari
passu basis
First pari passu charge on current assets of Vedanta Limited
Other secured working capital loan
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
24,935
1,091
26,026
19,292
1,240
20,532
As at
March 31, 2019
16
(` in Crore)
As at
March 31, 2018
125
-
114
552
49
360
-
2
308
639
-
-
166
290
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Facility Category
Non
Convertible
Debentures
Rupee term
loans from
banks
Security details
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 and
specifically exclude the 1MTPA alumina refinery of the company along with 90 MW
power plant in Lanjigarh and all its related expansions
Secured by 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 90 MW co-generation plant in Lanjigarh, including its movable plant and
machinery, capital works-in-process, machinery spares, tools and accessories, and
other movable fixed assets
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, Odisha. The Lanjigarh Refinery Expansion Project shall
specifically exclude the 1 MTPA alumina refinery of Vedanta Limited along with 90 MW
power plant in Lanjigarh and all its related capacity expansions
Secured by way of “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
Secured by a first pari passu charge on the whole of the present and future of the
movable fixed assets of 2400 MW (600 MW*4) Power Plant of Vedanta Limited at
Jharsuguda location
Secured by way of first pari passu charge on all present and future of the movable
fixed assets of 2400 MW (600 MW*4) Power Plant of Vedanta Limited at Jharsuguda
location, as may be identified and notified by the Issuer to the Security Trustee from
time to time, with minimum asset coverage of 1 time of the aggregate face value of
debentures outstanding at any point of time
Other secured non- convertible debuntures
First pari passu charge by way of hypothecation/ equitable mortgage on the movable/
immovable assets of the Aluminium Division comprising of alumina refinery having
output of 1 MTPA along with co-generation captive power plant with an aggregate
capacity of 90 MW at Lanjigarh, Odisha; aluminium smelter having output of 1.6 MTPA
along with a 1215 (9x135) MW CPP at Jharsuguda , Odisha, both present and future
A pari passu charge by way of hypothecation of all the movable fixed assets of the
Vedanta Limited pertaining to its Aluminium Division project consisting of (i) alumina
refinery having output of 1 MTPA (Refinery) along with co-generation captive power
plant with an aggregate capacity of 90 MW at Lanjigarh, Odisha (Power Plant); and (ii)
aluminium smelter having output of 1.6 MTPA along with a 1215 (9x135) MW CPP at
Jharsuguda, Odisha (Smelter) (the Refinery, Power Plant and Smelter). Also, a first pari
passu charge by way of equitable mortgage on the land pertaining to the mentioned
project of Aluminium division
Secured by a pari passu charge by way of hypothecation on the movable fixed assets
of the Lanjigarh Refinery Expansion Project including 210 MW Power Project for
the Lanjigarh Refinery Expansion Project. Lanjigarh Refinery Expansion Project shall
specifically exclude the 1 MTPA alumina refinery of Vedanta Limited along with 90 MW
power plant in Lanjigarh and all its related expansions
A pari passu charge by way of hypothecation on the movable fixed assets of Vedanta
Limited pertaining to its Aluminium Division comprising of 1 mtpa alumina refinery
plant with 90 MW captive power plant at Lanjigarh, Odisha and 1.6 mtpa aluminium
smelter plant with 1215 MW captive power plant at Jharsuguda, Odisha
A pari passu charge by way of hypothecation/equitable mortgage of the movable/
immovable fixed assets of Vedanta Limited pertaining to its Aluminium Division
comprising of 1 mtpa alumina refinery plant with 90 MW captive power plant at
Lanjigarh, Odisha and 1.6 mtpa aluminium smelter plant with 1215 MW captive power
plant at Jharsuguda, Odisha
First pari passu charge by way of hypothecation/ equitable mortgage on the movable/
immoveable assets of the Aluminium Division of the Borrower comprising of alumina
refinery having output of 1 MTPA along with co-generation captive power plant with a
n aggregate capacity of 90 MW at Lanjigarh, Orissa; aluminium smelter having output
of 1.6 MTPA along with a 1215 (9x135) MW CPP at Jharsuguda , Orissa and additional
charge on Lanjigarh Expansion project, both present and future
As at
March 31, 2019
850
(` in Crore)
As at
March 31, 2018
850
800
800
1,250
1,250
2,000
2,000
3,998
2,500
1,000
-
-
5,102
1,200
5,521
3,551
3,939
482
1,734
2,984
-
-
-
1,184
1,232
Total
26,026
20,532
* Includes 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 2018-19 291
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
c) The Company facilities are subject to certain financial and non- financial covenants. The primary covenants which must be
complied with include interest service coverage ratio, 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.
d) Terms of repayment of total borrowings outstanding as at March 31, 2019 are provided below -
(` in Crore)
Borrowings
Rupee term loan
Weighted
average
interest rate
Total
as at March
carrying
31, 2019
value
8.79% 15,037
<1 year
3,199
1-3 years
5,294
3-5 years
2,271
>5 years Remarks
4,319 Repayable in 404 quarterly
Non convertible debentures
Commercial paper
Working capital loan*
8.68% 9,898
7.50% 14,555
8.50% 1,532
1,300
14,555
1,532
8,600
-
-
-
-
-
installments and 5 installments
payable in the gap of 5 months and
7 months
- Repayable in 13 bullet payments
- Repayable in 72 bullet payments
- Export packing credit is repayable
within 1-6 months from the date of
drawal, cash credit can be repaid
anytime as per the availability of
business surplus during the validity
of the facility and working capital
loan is repayable in one bullet
payment.
Project buyers’ credit from banks
Amounts due on factoring
Deferred sales tax liability
16
3.51%
3.16% 1,077
87
NA
16
1,077
17
-
-
32
-
-
46
- Repayable in 2 bullet payments
- Repayable within one month
12 Repayable in 90 monthly
Redeemable preference shares
7.50%
2
2
-
-
instalments
- The redemption and dividend paid
to the preference shares unclaimed
if any, is payable on claim
Total
42,204
21,698
13,926
2,317
4,331
The above maturity is based on the total principal outstanding gross of issue expenses and discounting impact of deferred sales
tax liability.
* Includes loans repayable on demand from banks for ` 715 Crore and packing credit in foreign currencies from banks.
e) Terms of repayment of total borrowings outstanding as at March 31, 2018 are provided below -
(` in Crore)
Borrowings
Rupee term loan
Weighted
average
interest rate
Total
as at March
carrying
31, 2018
value
8.36% 10,692
<1 year
866
1-3 years
5,388
3-5 years
2,303
>5 years
2,168 Repayable in 171 quarterly instalments
Remarks
and 6 instalments payable in the gap
of 5 months and 7 months
Non convertible debentures
Commercial paper
Working capital loan*
8.89%
8,600
7.35% 14,815
3,313
7.71%
3,700
14,815
3,313
4,400
-
-
500
-
-
- Repayable in 13 bullet payments
- Repayable in 88 bullet payments
- Export packing credit is repayable
Project buyers' credit from banks
Amounts due on factoring
Deferred sales tax liability
Redeemable preference shares
1.77%
8.50%
NA
7.50%
127
65
91
3,010
127
65
10
3,010
-
-
37
-
-
-
41
-
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 in 103 monthly instalments
- Repayable in 1 bullet payment upon
18 months from date of issuance
Total
40,713
25,906
9,825
2,844
2,197
The above maturity is based on the total principal outstanding gross of issue expenses and discounting impact of deferred
sales tax liability.
* Includes loans repayable on demand from banks for ` 477 Crore and packing credit in foreign currencies from banks.
292
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
f) Movement in borrowings during the year is provided below-
Particulars
As at April 1, 2017
Cash flow
Other non cash changes
As at April 1, 2018
Cash flow
Other non cash changes
As at March 31, 2019
Borrowings due
within one year
Borrowings due
after one year
20,985
3,983
935
25,903
(1,165)
(3,055)
21,683
22,248
(9,578)
2,140
14,810
2,612
3,099
(` in Crore)
Total
43,233
(5,595)
3,075
40,713
1,447
44
20,521
42,204
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 of Cairn India Limited with Vedanta Limited.
18. FINANCIAL LIABILITIES - TRADE PAYABLES a
Particulars
Total outstanding dues of micro,small
and medium enterprises (Refer note
39(b))
Total outstanding dues of creditors
other than micro, small and medium
enterprises
Total outstanding dues of related
parties b
Operational buyers credit/suppliers
credit c
Total
-
-
-
-
-
As at March 31, 2019
Non-current
Current
59
Total
59
5,173
5,173
13
13
6,017
6,017
As at March 31, 2018
(` in Crore)
Non-current
-
-
-
-
Current
84
Total
84
5,473
5,473
57
57
8,452
8,452
11,262
11,262
14,066
14,066
(a) Trade payables are non- interest bearing and are normally settled upto 180 days terms.
(b) For terms and conditions relating to related party payables, see note 36.
(c) Operational Buyers’ Credit and Suppliers’ Credit is availed in foreign currency from offshore branches of Indian banks or
foreign banks at an interest rate ranging from 2.5% to 4% per annum and in rupee from domestic banks at interest rate ranging
from 8%-9%. These trade credits are largely repayable within 180 days from the date of draw down. Operational Buyer’s
credit availed in foreign currency is backed by Standby Letter of Credit issued under working capital facilities sanctioned
by domestic banks. Part of these facilities are secured by first pari passu charge over the present and future current assets
of the Company.
19. FINANCIAL LIABILITIES - OTHERS
Particulars
Non-current
Liability for capital expenditure
Security deposits from vendors &
others
Interest Accrued but not due
Current maturities of long term debt a
Unpaid/unclaimed dividend b
Unpaid matured deposits and interest
accrued thereon c
Profit petroleum payable
Dues to related parties (Refer note 36)
Other Liabilities d
Total
42
-
239
-
-
-
-
-
-
281
As at March 31, 2019
As at March 31, 2018
Current
3,379
14
710
4,503
75
0
624
84
2,094
11,483
Total
Non-current
3,421
14
949
4,503
75
0
624
84
2,094
11,764
44
-
-
-
-
-
-
-
-
44
Current
1,633
17
738
7,583
87
0
481
25
1,680
12,244
(` in Crore)
Total
1,677
17
738
7,583
87
0
481
25
1,680
12,288
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 293
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT (a) Current Maturities of long term debt consists of:
Particulars
Non-convertible debentures
Deferred sales tax liability
Rupee term loans from banks
Redeemable preference shares
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
1,300
17
3,184
2
4,503
3,700
10
863
3,010
7,583
(b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except
` 0.11 Crore (March 31, 2018: ` 0.07 Crore) which is held in abeyance due to a pending legal case.
(c) Matured deposits of ` 0.01 Crore (March 31,2018: ` 0.01 Crore) due for transfer to Investor Education and Protection Fund
have not been transferred in view of pending litigation between the beneficiaries.
(d) Includes revenue received in excess of entitlement interest of ` 1,439 Crore (March 31, 2018: ` 648 Crore), reimbursement of
expenses, provision for expenses, liabilities related to compensation/claim etc.
20. FINANCIAL INSTRUMENTS
A. Financial assets and liabilities:
The accounting classification of each category of financial instruments, and their carrying amounts, are set out below:
Derivatives
designated
as hedging
instruments
Amortised
cost
Total carrying
value
Fair value
through profit
or loss
4,378
170
-
-
-
6
-
Fair value
through other
comprehensive
income
115
-
-
-
-
-
-
4,554
115
-
-
-
-
-
40
-
40
Fair value
hrough profit
or loss
Derivatives
designated
as hedging
instruments
-
909
342
-
1,251
-
-
1
-
1
-
3,044
3,209
682
315
-
3,249
10,499
Amortised
cost
42,204
10,353
-
7,261
59,818
4,493
3,214
3,209
682
315
46
3,249
15,208
Total carrying
value
42,204
11,262
343
7,261
(` in Crore)
Total fair
value
4,493
3,214
3,209
682
315
46
3,249
15,208
(` in Crore)
Total fair
value
42,169
11,262
343
7,261
61,070
61,035
As at March 31, 2019
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
294
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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
5,537
477
-
-
-
20
-
Fair value
through other
comprehensive
income
160
-
-
-
-
-
-
6,034
160
Fair value
hrough profit
or loss
-
3,473
26
-
3,499
Derivatives
designated
as hedging
instruments
-
-
-
-
-
82
-
82
Derivatives
designated
as hedging
instruments
-
-
0
-
0
Amortised
cost
Total carrying
value
-
1,962
1,144
450
14
-
3,446
7,016
5,697
2,439
1,144
450
14
102
3,446
13,292
Amortised
cost
40,713
10,593
-
4,705
56,011
Total carrying
value
40,713
14,066
26
4,705
59,510
(` in Crore)
Total fair
value
5,697
2,439
1,144
450
14
102
3,446
13,292
(` in Crore)
Total fair
value
40,762
14,066
26
4,705
59,559
* 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, 2019 and March 31, 2018 measured
at fair value:
As at March 31, 2019
Financial Assets
At fair value through profit or loss
- Investments
- Derivative financial assets*
- Trade receivables
At fair value through other comprehensive income
- Investments
Derivative designated as hedging instruments
- Derivative financial assets*
Total
Level 1
Level 2
(` in Crore)
Level 3
1,416
-
-
2,881
6
170
104
-
1,520
40
3,097
81
-
-
11
92
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 295
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Financial Liabilities
At fair value through profit or loss
- Derivative financial liabilities*
- Trade payables
Derivative designated as hedging instruments
- Derivative financial liabilities*
Total
As at March 31, 2018
Financial Assets
At fair value through profit or loss
- Investments
- Trade receivables
- Derivative financial assets*
At fair value through other comprehensive income
- Investments
Derivative designated as hedging instruments
- Derivative financial assets*
Total
Financial Liabilities
At fair value through profit or loss
- Derivative financial liabilities*
- Trade payables
Derivative designated as hedging instruments
- Derivative financial liabilities*
Total
* Refer “D” below.
Level 1
Level 2
(` in Crore)
Level 3
-
-
-
-
342
909
1
1,252
-
-
-
-
Level 1
Level 2
(` in Crore)
Level 3
1,957
-
-
3,580
477
20
149
-
-
2,106
82
4,159
-
-
-
11
-
11
Level 1
Level 2
(` in Crore)
Level 3
-
-
-
-
26
3,473
0
3,499
-
-
-
-
The below table summarises the fair value of borrowings which are carried at amortised cost as at March 31, 2019 and
March 31, 2018:
As at March 31, 2019
Financial Liabilities
Borrowings
Total
As at March 31, 2018
Financial Liabilities
Borrowings
Total
Level 1
-
-
Level 1
-
-
Level 2
42,169
42,169
Level 2
40,762
40,762
(` in Crore)
Level 3
-
-
(` in Crore)
Level 3
-
-
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
296
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).
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.
Other non-current financial assets and liabilities: Fair value is
calculated using a discounted cash flow model with market
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
assumptions, unless the carrying value is considered to
approximate to fair value.
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.
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 the 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.).
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, 2019 have
been measured as at that date. As such, the fair values of
these financial instruments subsequent to reporting date may
be different than the amounts reported at each year-end.
There were no significant transfers between Level 1, Level 2
and Level 3 during the 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.
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
business units 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
business units. 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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 297
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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
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 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.
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, 2019, the value of net financial assets linked
to commodities (excluding derivatives) accounted for on
provisional prices was ` 15 Crore (March 31, 2018: liability
of ` 3,335 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, 2019.
Set out below is the impact of 10% increase in LME prices
on pre-tax profit/ (loss) for the year and pre-tax total equity
as a result of changes in value of the Company’s commodity
financial instruments:
For the year ended March 31, 2019
Copper
For the year ended March 31, 2018
Copper
298
Total Exposure
Effect on profit/(loss) of a 10%
increase in the LME
Effect on total equity of a 10%
increase in the LME
(53)
(5)
-
(` in Crore)
Total Exposure
(3,416)
Effect on profit/(loss) of a 10%
increase in the LME
Effect on total equity of a 10%
increase in the LME
(342)
-
(` in Crore)
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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.
The impact on pre-tax profit/(loss) mentioned above includes
the impact of a 10% increase in closing copper LME for
provisionally priced copper concentrate purchased at Copper
division custom smelting operations in India of ` 74 Crore
(March 31, 2018: ` 368 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 / Stable from CRISIL AA /Positive
during the year on account of delay in deleveraging amid
weaker commodity prices. India Ratings has revised the
outlook on Vedanta Limited’s ratings to IND AA / Stable from
IND AA/ Positive on account of weaker profitability resulting
in delay in deleveraging. 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 ,205 Crore, and cash, bank and
current investments of ` 8,269 Crore as at March 31, 2019, are
expected to be sufficient to 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.
As at March 31, 2019
Payments due by year
Borrowings *
Derivative financial liabilities
Trade Payables and other financial liabilities **
Total
As at March 31, 2018
Payments due by year
Borrowings *
Derivative financial liabilities
Trade Payables and other financial liabilities **
Total
<1 year
24,348
343
17,612
42,303
<1 year
28,336
26
18,048
46,410
1-3 years
16,599
-
42
3-5 years
3,281
-
-
>5 years
5,334
-
-
16,641
3,281
5,334
1-3 years
11,556
-
44
3-5 years
3,373
-
-
>5 years
2,810
-
-
11,600
3,373
2,810
(` in Crore)
Total
49,562
343
17,654
67,559
(` in Crore)
Total
46,075
26
18,092
64,193
*Includes Non-current borrowings, current borrowings, current maturities of non-current borrowings and committed interest payments on borrowings and
interest accrued on borrowings.
**Includes both Non-current and current financial liabilities and committed interest payment, as applicable. Excludes current maturities of non-current
borrowings and interest accrued on borrowings.
The Company had access to following funding facilities :
As at March 31, 2019
Funding facilities
Fund/non-fund based
As at March 31, 2018
Funding facilities
Fund/non-fund based
Total Facility
42,378
Drawn
31,582
Total Facility
39,551
Drawn
32,111
(` in Crore)
Undrawn
10,796
(` in Crore)
Undrawn
7,440
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 299
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Collateral
The Company has pledged financial instruments with carrying
amount of ` 13,030 Crore and inventories with carrying amount
of ` 7,657 Crore as per the requirements specified in various
financial facilities in place. The counterparties have an obligation
to release the securities to the Company when financial facilities
are surrendered.
(b) Foreign exchange risk
Fluctuations in foreign currency exchange rates may have
an impact on the statement of profit and loss, the statement
of changes 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 Indian Rupee
(INR). The assets are located in India and the Indian
Rupee is the functional currency except for Oil and Gas
business operations which have a dual functional currency.
Natural hedges available in the business are identified at each
entity level and hedges are placed only for the net exposure.
Short-term net exposures are hedged progressively based
on their maturity. A more conservative approach has been
adopted for project expenditures to avoid budget overruns,
where cost of the project is calculated taking into account the
hedge cost. The hedge mechanisms are reviewed periodically
to ensure that the risk from fluctuating currency exchange
rates is appropriately managed.
The following analysis is based on the gross exposure as at
the reporting date which could affect the 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”.
The carrying amount of the Company’s financial assets and
liabilities in different currencies are as follows :
Currency
INR
USD
Others
Total
(` in Crore)
As at March 31, 2019
As at March 31, 2018
Financial
Assets
8,355
6,850
3
15,208
Financial
liabilities
46,288
14,502
280
61,070
Financial
Assets
11,201
1,966
125
13,292
Financial
liabilities
44,508
14,709
293
59,510
The Company’s exposure to foreign currency arises where an 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 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 businesses.
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 monetary financial assets/liabilities:
For the year ended March 31, 2019
As at March 31, 2019
USD
INR
For the year ended March 31, 2018
As at March 31, 2018
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
481
46
0
-
Effect of
10% strengthening
of functional currency on
pre-tax profit/ (loss)
1,129
10
(` in Crore)
Effect of
10% strengthening
of foreign currency on
equity
0
-
A 10% weakening of functional currencies of the respective businesses would have an equal and opposite effect on the
Company’s financial statements.
300
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(c) Interest rate risk
At March 31, 2019, the Company’s net debt of `33,935 Crore
(March 31, 2018: ` 33,582 Crore) comprises cash, bank
and investments of ` 8,269 Crore (March 31, 2018: ` 7,131
Crore) offset by debt of ` 42,204 Crore (March 31, 2018: ₹
` 40,713 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, 2019 to interest rate risk is as follows:
As at March 31, 2019
Financial Assets
Floating rate
Financial assets
Fixed rate
financial assets
(` in Crore)
Non-interest
bearing financial
assets
2,937
2,941
9,330
Total
15,208
The exposure of the Company’s financial liabilities as at March 31, 2019 to interest rate risk is as follows:
As at March 31, 2019
Financial Liabilities
Floating rate
financial liabilities
Fixed rate
financial liabilities
Total
(` in Crore)
Non-interest
bearing financial
liabilities
61,070
15,589
32,544
12,937
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
(` in Crore)
Non-interest
bearing financial
assets
3,978
3,043
6,271
Total
13,292
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
Total
Floating rate
financial liabilities
Fixed rate
financial liabilities
(` in Crore)
Non-interest
bearing financial
liabilities
59,510
11,840
37,234
10,436
Considering the net debt position as at March 31, 2019 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% movement in interest rates on floating rate financial assets/ liabilities
(net) on profit/(loss) and equity assuming that the changes occur at the reporting date and has been calculated based on risk
exposure outstanding as of date. The year end balances are not necessarily representative of the average debt outstanding
during the year. This analysis also assumes that all other variables, in particular foreign currency rates, remain constant.
Increase in interest rates
0.50%
1.00%
2.00%
(` in Crore)
Effect on pre-tax
profit/(loss) during
the year ended
March 31, 2019
Effect on pre-tax
profit/(loss) during
the year ended
March 31, 2018
(63)
(127)
(253)
(39)
(79)
(157)
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 301
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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.
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 ` 15,208 Crore and ` 13,292 Crore as
at March 31, 2019 and March 31, 2018 respectively.
The Company is exposed to credit risk for trade receivables,
contract assets, investments, loans, other financial assets, and
derivative financial instruments.
The maximum credit exposure on financial guarantees given
by the Company for various financial facilities is described in
Note 35 on “Commitments, contingencies, and guarantees”.
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.
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 current investments, counterparty limits
are in place to limit the amount of credit exposure to any one
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, 2019, that defaults in payment
obligations will occur except as described in Note 7 and 9
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, site restoration fund 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, 2019 and
March 31, 2018:
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
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
4,514
4,437
292
140
728
739
295
60
144
645
6,413
5,581
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 experiences does not expect any
material loss on its receivables.
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.
302
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Movement in allowances for Financial Assets (Trade receivables and financial assets - others)
Particulars
As at April 01, 2017
Allowance made during the year
Reversals/ write - offs during the year
Exchange differences
As at March 31, 2018
Allowance made during the year
Reversals/ write - offs during the year
Exchange differences
As at March 31, 2019
Trade receivables Financial assets - others
(` in Crore)
540
196
(215)
0
521
4
0
0
525
198
-
-
-
198
48
(5)
7
248
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) 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 though OCI 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, 2019.
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 2019. 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, 2020 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.
(ii) 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.
(iii) Non- designated 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 303
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The fair value of the Company’s derivative positions recorded under derivative financial assets and derivative financial liabilities
are as follows:
Derivative Financial Instruments
Current
Cash flow hedge*
- Commodity contracts
- Forward foreign currency contracts
Non - qualifying hedges/economic hedge
- Commodity contracts
- Forward foreign currency contracts
- Cross currency swap
Total
As at March 31, 2019
As at March 31, 2018
Assets
Liabilities
Assets
Liabilities
(` in Crore)
3
37
1
5
0
46
-
1
71
265
6
343
81
1
-
20
0
102
-
0
15
10
1
26
* Refer statement of profit and loss and statement of changes in equity for the changes in the fair value of cash flow hedges.
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 at 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.
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
8,893
1,401
9,983
223
Particulars
Forwards / Futures
Copper (MT)
Gold (Oz)
Silver (Oz)
Aluminium (MT)
21. OTHER LIABILITIES
As at March 31, 2019
As at March 31, 2018
Purchases
Sales
Purchases
Sales
8,675
-
63,275
49,993
18,682
5,93,577
950
63,250
61,850
8,070
30,219
-
53,825
1,05,594
5,65,393
73,675
Particulars
Non-current
Current
Total
Non-current
Current
As at March 31, 2019
As at March 31, 2018
Amount payable to owned post - employment
benefit trust (Refer note 36)
Other statutory Liabilities a
Deferred government grant b
Advance from customers c
Advance from related party (Refer note 36) c
Other liabilities
Total
-
-
2,468
-
-
-
7
7
1,284
72
6,787
2
123
1,284
2,540
6,787
2
123
-
-
2,479
-
-
-
6
1,001
71
3,614
-
123
2,468
8,275
10,743
2,479
4,815
7,294
(` in Crore)
Total
6
1,001
2,550
3,614
-
123
(a) Other statutory liabilities mainly includes contribution to PF, ESIC, withholding taxes, goods & service tax, VAT etc.
(b) 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.
(c) Advance from customers are contract liabilities and include amounts received under long term supply agreements.
The advance payment plus a fixed rate of return/ discount will be settled by supplying respective commodity over a period up to
twenty four months under an agreed delivery schedule as per the terms of the respective agreements. As these are contracts that
the Company expects, and has the ability, to fulfil through delivery of a non-financial item, these are recognised as advance from
customers and will be recognised as revenue as and when control of respective commodities is transferred to customer under
the agreements. The portion of the advance that is expected to be settled within the next 12 months has been classified as a
current liability.
304
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
22. PROVISIONS
Particulars
Non-current
Current
Total
Non-current
Current
Total
As at March 31, 2019
As at March 31, 2018
(` in Crore)
Provision for employee benefits (Refer note 23) a
- Retirement Benefit
- Others
Provision for restoration, rehabilitation and
environmental costs b,c
2
-
986
45
95
-
47
95
986
2
30
820
36
93
-
38
123
820
Total
988
140
1,128
852
129
981
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(a)(P)]:
Particulars
At April 01, 2017
Additions
Utilised
Unused amounts reversed
Unwinding of discount (Refer note 29)
Revision in estimates
Exchange differences
At March 31, 2018
Unwinding of discount (Refer note 29)
Revision in estimates
Exchange differences
At March 31, 2019
(` in Crore)
Restoration,
rehabilitation and
environmental
costs (refer c)
759
8
(1)
(17)
27
41
3
820
30
85
51
986
c) Restoration, rehabilitation and environmental costs
The provisions for restoration, rehabilitation and environmental liabilities represent the management’s best estimate of the costs
which will be incurred in the future to meet the Company’s obligations under existing Indian law and the terms of the Company’s
exploration and other licences and contractual arrangements.
The principal restoration and rehabilitation provisions are recorded within oil & gas division where a legal obligation exists relating
to the oil and gas fields, where costs are expected to be incurred in restoring the site of production facilities at the end of the
producing life of an oil field. The Company recognises the full cost of site restoration as a liability when the obligation to rectify
environmental damage arises.
These amounts are calculated by considering discount rates within the range of 2% to 3%, and become payable at the end of the
producing life of an oil field and are expected to be incurred over a period of twenty two years.
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the
development or ongoing production from a producing field.
23. EMPLOYEE BENEFIT PLANS
The Company participates in defined contribution and benefit plans, the assets of which are held (where funded) in separately
administered funds.
For defined contribution plans the amount charged to the statement of profit and loss is the total amount of contributions
payable in the year.
For defined benefit plans, the cost of providing benefits under the plans is determined by actuarial valuation separately each year
for each plan using the projected unit credit method by independent qualified actuaries as at the year end. Remeasurement gains
and losses arising in the year are recognised in full in other comprehensive income for the year.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 305
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
i) Defined contribution plans
The Company contributed a total of ` 63 Crore for the year ended March 31, 2019 and ` 59 Crore for the year ended March 31,
2018 to the following defined contribution plans.
Particulars
Employer’s contribution to recognised provident fund and family pension fund
Employer’s contribution to superannuation
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
46
17
63
45
14
59
Central recognised provident fund
In accordance with the ‘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 the year ended March 31,
2019 and March 31, 2018) 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.
Family pension fund
The Pension Fund was established in 1995 and is managed by
the Government of India. The employee makes no contribution
to this fund but the employer makes a contribution of 8.33% of
salary each month subject to a specified ceiling per employee.
This is provided for every permanent employee on the payroll.
At the age of superannuation, contributions ceases and the
individual receives a monthly payment based on the level of
contributions through the years, and on their salary scale at
the time they retire, subject to a maximum ceiling of salary
level. The Government funds these payments, thus the
Company has no additional liability beyond the contributions
that it makes, regardless of whether the central fund is in
surplus or deficit.
Superannuation
Superannuation, another pension scheme applicable in India,
is applicable only to 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.
ii) Defined benefit plans
(a) 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, 2019 and March 31, 2018.
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 ` 9 Crore for the year
ended March 31,2019 and ` 10 Crore for the year ended
March 31, 2018. The present value of obligation and the fair
value of plan assets of the trust are summarized 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, 2019
As at
March 31, 2018
193
(187)
Nil
181
(174)
Nil
As at
March 31, 2019
As at
March 31, 2018
59.00%
37.00%
4.00%
0.00%
53.00%
42.00%
3.00%
2.00%
(b) Gratuity plan
In accordance with the Payment of Gratuity Act, 1972, the Company contributes 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 Company. The Gratuity plan is a funded plan and the Company makes contribution to
recognised funds in India.
306
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Based on actuarial valuations conducted as at year end using the projected unit credit method, a provision is recognised in full for
the benefit obligation over and above the funds held in the Gratuity Plan.
The iron ore and oil & gas division of the Company have constituted a trust recognised by Indian Income Tax Authorities for
gratuity to employees, contributions to the trust are funded with Life Insurance Corporation of India (LIC) and ICICI Prudential Life
Insurance Company Limited.
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of the Gratuity plan 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 the Gratuity plan are as follows:
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 the Gratuity plan are as follows:
Particulars
Re-measurement of the net defined benefit obligation:-
Actuarial losses / (gains) arising from experience adjustments
Actuarial losses / (gains) arising from changes in financial assumptions
Losses / (gains) on plan assets
Components of defined benefit costs recognised in other comprehensive income
Movement in present value of the Gratuity plan:
Particulars
Opening balance
Current service cost
Benefits paid
Interest cost
Actuarial losses / (gains) arising from changes in assumptions
Closing balance
Movement in the fair value of Gratuity 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, 2019
7.80%
2%-10%
As at
March 31, 2018
7.70%
2%-10%
IALM (2006-08) IALM (2006-08)
LIC(1996-98)
Ultimate
LIC(1996-98)
Ultimate
As at
March 31, 2019
131
(178)
(47)
Year ended
March 31, 2019
17
3
20
(` in Crore)
As at
March 31, 2018
123
(161)
(38)
(` in Crore)
Year ended
March 31, 2018
16
2
18
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
3
0
1
4
-
(2)
1
(1)
Year ended
March 31, 2019
161
17
(15)
12
3
178
Year ended
March 31, 2019
123
16
(16)
(1)
9
131
(` in Crore)
Year ended
March 31, 2018
148
16
(12)
11
(2)
161
(` in Crore)
Year ended
March 31, 2018
113
15
(13)
(1)
9
123
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 307
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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, 2019 and ` 8 Crore for the year ended
March 31, 2018.
The weighted average duration of the defined benefit obligation is 16.98 years and 16.75 years as at March 31, 2019 and
March 31, 2018 respectively.
The Company expects to contribute ` 23 Crore to the funded defined benefit plans during the year ending March 31,2020.
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)
As at
March 31, 2019
As at
March 31, 2018
(7)
8
8
(7)
(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.
The present value of the defined benefit plan obligation 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.
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.
Interest risk
A decrease in the interest rate on plan assets will increase the
net plan obligation.
Longevity risk / Life expectancy
The present value of the defined benefit plan obligation is
calculated by reference to the best estimate of the mortality
of plan participants both during and at the end of the
employment. An increase in the life expectancy of the plan
participants will increase the plan obligation.
Salary growth risk
The present value of the defined benefit plan obligation
is calculated by reference to the future salaries of plan
participants. An increase in the salary of the plan participants
will increase the plan obligation.
24. EMPLOYEE BENEFITS EXPENSE a
Particulars
Salaries and Wages
Share based payments (Refer note 25)
Contributions to provident and other funds (Refer Note 23)
Staff welfare expenses
Less: Cost allocated/directly booked in Joint ventures
Total
a. Net of recoveries of ` 83 Crore ( March 31, 2018: ` 56 Crore) from subsidiaries.
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
1,257
1,165
62
89
95
(641)
862
56
85
84
(588)
802
308
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
25. SHARE BASED PAYMENTS
The Company offers equity based and cash based option
plans to its employees, officers and directors through the
Company’s stock option plan introduced in 2016, Cairn India’s
stock option plan now administered by the Company pursuant
to merger with the Company and Vedanta Resources Limited
(earlier known as 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
‘VRL 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 tenure based, business
performance (EBIDTA) based and market 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 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, 2019 is presented below:
Exercise Period
Options
outstanding
April 1, 2018
Options
granted
during the
year
December 15, 2019 - June 14, 2020
70,98,602
September 1, 2020 - February 28, 2021
96,17,340
October 16, 2020 - April 15, 2021
November 1, 2020 - April 30, 2021
November 1, 2021 - April 30, 2022
November 1, 2021 - April 30, 2022
(Cash settled)
11,570
28,740
Options
lapsed
during the
year
Options lapsed
during the
year owing to
performance
conditions
5,90,376
-
8,48,381
4,94,566
-
-
444
1,102
Options
exercised
during the
year
-
-
-
-
Options
outstanding
March 31, 2019
65,08,226
82,74,393
11,126
27,638
-
-
-
-
1,37,93,980
2,27,780
2,47,870
23,030
-
-
- 1,35,66,200
-
2,24,840
Year of
Grant
2017
2018
2018
2018
2019
2019
1,67,56,252 1,40,41,850
16,89,567
4,96,112
- 2,86,12,423
The details of share options for the year ended March 31, 2018 is presented below:
Exercise Period
Options
outstanding
April 1, 2017
Options
granted
during the
year
December 15, 2019 -June 14, 2020
78,03,400
0
September 1, 2020 - February 28, 2021
- 1,00,48,650
October 16, 2020 - April 15, 2021
November 1, 2020 - April 30, 2021
-
-
11,570
28,740
Options
lapsed
during the
year
7,04,798
4,31,310
-
-
Year of
Grant
2017
2018
2018
2018
78,03,400 1,00,88,960
11,36,108
Options lapsed
during the
year owing to
performance
conditions
Options
exercised
during the
year
Options
outstanding
March 31, 2018
-
-
-
-
-
- 70,98,602
- 96,17,340
-
-
11,570
28,740
- 1,67,56,252
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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 309
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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 Company’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,
2019 and March 31, 2018 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 (Tenure & EBIDTA based/Performance based)
Year ended March 31, 2019
Year ended March 31, 2018
ESOS November 2018
Cash settled - 2,47,870
Equity settled -1,37,93,980
ESOS September, October and
November 2017
Equity settled - 1,00,88,960
₹ ` 1
₹ ` 195.00
3 years
44.3%
3 years
6.50%
7.70%
₹ ` 1
₹ ` 308.90
3 years
48%
3 years
3.70%
6.50%
10%p.a.
₹ ` 159.9/` 96.3
10%p.a.
₹ ` 275.3/` 161.1
The Company recognized total expenses of ` 82 Crore (March 31, 2018: ` 47 Crore) related to equity settled share-based
payment transactions for the year ended March 31, 2019 out of which ` 30 Crore (March 31, 2018: `18 Crore) was recovered
from group companies. The total expense recognised on account of cash settled share based plan during the year ended
March 31, 2019 is ` 0 Crore (March 31, 2018: Nil) and the carrying value of cash settled share based compensation liability as at
March 31, 2019 is ` 0 Crore (March 31, 2018: Nil).
Employee stock option plans of erstwhile Cairn India Limited:
The Company has provided CIESOP share based payment scheme to its employees.
CIESOP plan
There are no specific vesting conditions under CIESOP plan other than completion of the minimum service period of 3 years from
the date of grant. Phantom options are exercisable proportionate to the period of service rendered by the employee subject to
completion of one year. The exercise period is 7 years from the vesting date.
Details of employees stock option plans is presented below
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, 2019
Year ended March 31, 2018
Number of
options
Weighted average
exercise price in `
Number of
options
Weighted average
exercise price in `
71,30,625
Nil
90,896
2,35,169
3,27,501
64,77,059
64,77,059
275.5
NA
187.0
189.0
287.2
279.2
279.2
89,62,666
264.3
Nil
Nil
15,92,759
2,39,282
71,30,625
71,30,625
NA
NA
213.8
268.2
275.5
275.5
Weighted average share price at the date of exercise of stock options is ` 232.7 (March 31, 2018: `324.6)
Scheme
The details of exercise price for stock options outstanding as at March 31, 2019 are:
CIESOP Plan
The details of exercise price for stock options outstanding as at March 31, 2018 are:
CIESOP Plan
310
Range of
exercise
price in `
Weighted average
remaining
contractual life of
options (in years)
Weighted
average exercise
price in `
200.05-291.25
187-291.25
NA
NA
279.2
275.5
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Employee share option plan of Vedanta Resources Limited
(earlier known as Vedanta Resources Plc)
The value of shares that are awarded to members of the
Company is calculated by reference to the individual fixed
salary and share-based remuneration consistent with local
market practice. ESOP scheme of Vedanta Resources Limited
is both tenure and performance based share schemes.
The options are indexed to and settled by Parent’s shares
(Vedanta Resources Limited 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.
During the current year, through an open offer all the
outstanding equity settled options were bought back by
26. A) REVENUE FROM OPERATIONS
Vedanta Resources Limited’s parent, Volcan Investments
Limited. On account of delisting of Vedanta Resources
Limited, the cash based options were also early settled.
The accelerated charge on account of early settlement of both
the equity settled and cash settled options was recognised in
the Statement of Profit and Loss.
Amount recovered by the Parent and recognized by the
Company for the year ended March 31, 2019 is ` 11 Crore
(March 31, 2018: ` 29 Crore). The Company considers these
amounts as not material and accordingly has not provided
further disclosures.
Out of the total expense of ` 63 Crore (March 31, 2018: ` 58
Crore) pertaining to above options for the year ended March 31,
2019, the Company has capitalised ` 1 Crore (March 31, 2018:
` 2 Crore) expense for the year ended March 31, 2019.
Particulars
Sale of products (Net of excise duty) a
Add: Excise duty
Total sale of products (Gross of excise duty)
Sale of services
Total
Year ended
March 31, 2019
37,760
-
37,760
338
38,098
(` in Crore)
Year ended
March 31, 2018
44,286
450
44,736
760
45,496
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.
b) Revenue from sale of products and from sale of services for the year ended March 31, 2019 comprises of revenue from
contracts with customers of ` 38,111 Crore and a net loss on mark-to-market of ` 13 Crore on account of gains/ losses relating
to sales that were provisionally priced as at March 31, 2018 with the final price settled in the current year, gains/ losses relating
to sales fully priced during the year, and marked to market gains/ losses relating to sales that were provisionally priced as at
March 31, 2019. It further includes ` 2,522 Crore for which contract liabilities existed at the beginning of the year.
Revenue from sale of products are recorded at a point in time and those from sale of services are recognised over a period of time.
B) OTHER OPERATING INCOME
Particulars
Export incentives
Scrap sales
Miscellaneous income
Total
27. OTHER INCOME
Particulars
Net gain on investments measured at FVTPL
Interest income from investments measured at FVTPL
Interest income from financial assets at amortised cost
- Bank Deposits
- Loans
- Others
Interest on income tax refund
Dividend income from
- financial assets at FVTPL
- financial assets at FVOCI
- investment in Subsidiaries
Deferred government grant income
Miscellaneous income
Total
Year ended
March 31, 2019
322
87
137
546
Year ended
March 31, 2019
96
124
(` in Crore)
Year ended
March 31, 2018
263
100
115
478
(` in Crore)
Year ended
March 31, 2018
615
232
67
27
122
106
15
1
5,485
72
37
6,152
49
11
121
181
8
1
2,195
69
77
3,559
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 311
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
28. CHANGES IN INVENTORIES OF FINISHED GOODS, WORK-IN-PROGRESS AND STOCK-IN-TRADE
Particulars
Opening Stock:
Finished Goods
Work in Progess
Total
Add / (Less) : Foreign exchange translation difference
Add / (Less) : Impairment of stock during the year [Refer note 31(c)]
Closing Stock
Finished Goods
Work in Progess
Total
Sub-total
Add / (Less) : Copper Concentrate (raw material) sold during the year
Changes in Inventory
29. 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 (Refer note 22)
Less: Capitalisation of finance costs b
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
364
1,811
2,175
4
-
880
1,195
2,075
104
203
307
403
1,764
2,167
0
(3)
364
1,811
2,175
(11)
-
(11)
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
4,076
215
3
30
(567)
3,757
3,544
129
2
27
(349)
3,353
a)
Includes ` 130 Crore (March 31, 2018: ` 209 Crore) on redeemable preference shares.
b)
Interest rate of 7.5% was used to determine the amount of general borrowing costs eligible for capitalization in respect of
qualifying asset for the year ended March 31, 2019.
c)
Interest expense on income tax is ` 0 Crore (March 31, 2018: ` 0 Crore)
30. OTHER EXPENSES *
Particulars
Cess on crude oil
Royalty
Consumption of stores and spare parts
Repairs to plant and equipment
Carriage
Mine Expenses
Net loss on foreign currency transactions and translation
Other Selling Expenses
Repairs to building
Insurance
Repairs others
Loss on sale/ discard of property, plant and equipment (net)
Rent
Rates and taxes
Amortisation of prepaid lease charges
Exploration costs written off (Refer note 5)
Directors sitting fees and commission
Remuneration to Auditors a
Provision for doubtful advances/ expected credit loss
Bad debts written off
Miscellaneous expenses b, c
Less: Cost allocated/directly booked in Joint ventures
Total
* Net of recoveries of ` 62 Crore ( March 31, 2018: ` 73 Crore) from subsidiaries
312
Year ended
March 31, 2019
1,492
175
560
276
550
115
319
13
101
72
72
76
45
13
3
48
5
12
(6)
6
2,026
(388)
5,585
(` in Crore)
Year ended
March 31, 2018
1,085
254
520
407
609
206
240
89
59
75
95
11
52
25
3
-
4
11
38
2
1,490
(277)
4,998
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS a. Remuneration to auditors comprises of:
Particulars
Payment to auditors
For statutory audit (including quarterly reviews and international reporting)
For parent company reporting
For certification services
For other services
For reimbursement of expenses
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
9
2
0
1
0
12
8
2
0
0
1
11
(b) Includes Corporate social responsibility expenses of ` 52 Crore (March 31, 2018: ` 45 Crore) as detailed in note 39(a).
(c) The Company made contributions through electoral bonds and to an electoral trust of ` 64.5 Crore and ` 2.5 Crore
respectively for the year ended March 31, 2019, which is included in Miscellaneous expenses. Miscellaneous expenses for the
year ended March 31, 2018 includes refund of ` 4 Crore being the donation given to a political party.
31. EXCEPTIONAL ITEMS
Particulars
Loss on unusable capital work-in-
progress a
Net reversal of impairment on
Property, plant and equipments and
exploration intangible assets under
development b
Impairment of Iron ore assets c
Reversal /(Charge) pursuant to Supreme
Court order/ arbitration order d
Net reversal of impairment on
investment in subsidiaries e
Year ended March 31, 2019
Year ended March 31, 2018
Exceptional Items
Tax effect of
exceptional item
Exceptional item
after tax
Exceptional Items
Tax effect of
exceptional item
Exceptional item
after tax
(` in Crore)
-
261
-
59
4
-
(91)
-
(21)
-
-
(251)
87
(164)
170
3,513
(1,227)
2,286
-
38
4
(452)
(113)
158
40
(294)
(73)
2,710
-
2,710
Total
324
(112)
212
5,407
(942)
4,465
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, the Company has recognized impairment
reversal of ` 261 Crore in respect of Oil & Gas Block
KG-ONN-2003/1 (CGU) on booking of commercial reserves
and subsequent commencement of commercial production.
The impairment reversal has been recorded against Oil & Gas
producing facilities. The recoverable amount of the Company’s
share in KG-ONN-2003/1 (CGU) was determined to be ` 208
Crore (US$ 30 million).
The recoverable amount of the KG-ONN-2003/1 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 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 year ended March 31, 2019
and scales upto long-term nominal price of US$ 65 per barrel
by year ended March 31, 2022 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 11.8%
derived from the post-tax weighted average cost of capital.
The sensitivities around change in crude price and discount rate
are not material to the financial statements.
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:
i) 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 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) as at March 31, 2018.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 313
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 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 and scales upto long-term nominal price of US$ 65 per
barrel three years thereafter 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%
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 was relinquished during the previous year.
c. During the year ended March 31, 2018, the Company had
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.
d. During the current year, the Company has partly reversed
the provision for interest of ` 59 Crore for dues towards
a vendor pursuant to the Hon’ble Supreme Court of India
order. A charge of ` 113 Crore in this matter was recognised
pursuant to an unfavourable arbitration order during the
previous year.
e. During the year ended March 31, 2019 and March 31, 2018
the Company has recognized net impairment reversal of ₹
` 4 Crore and ` 2,710 Crore respectively, on its investment in
subsidaries, comprising of:
Particulars
Reversal of impairment on investment in Cairn India Holdings Limited (Refer (i) below)
Impairment charge on investment in Sesa Resources Limited (Refer (ii) below)
Net Impairment reversal on investment in subsidiaries
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
52
(48)
4
3,358
(648)
2,710
(i) Cairn India Holding Limited (‘CIHL’) holds 35% share in Rajasthan oil and gas block through its step down subsidiary Cairn
Energy Hydrocarbons Limited. In the previous year, the recoverable value of investment in CIHL was determined to be ` 13,754
Crore (US$ 2,115 million), 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 (b)(i) above).
(ii) The Supreme Court judgement relating to iron ore mining in Goa resulted in impairment of investment in Sesa Resources Limited.
The recoverable value is represented by the estimated selling price of the underlying assets of SRL. (Refer note (c) above).
314
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
32. 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
Total Current Tax (a)
Deferred tax:
Origination and reversal of temporary differences
Charge/(credit) in respect of deferred tax for earlier years
Charge in respect of exceptional items
Total Deferred Tax (b)
Net tax (benefit)/ expense (a+b)
Profit before tax
Effective income tax rate (%)
Tax expense
Particulars
Tax effect of exceptional items
Tax expense- others
Net tax expense
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
5
5
(244)
(1)
112
(133)
(128)
4,947
(3%)
-
-
994
32
942
1,968
1,968
9,224
21%
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
112
(240)
(128)
942
1,026
1,968
(b) A reconciliation of income tax expense/ (credit) applicable to profit/ (loss) before tax at the Indian statutory income tax
rate to recognised income tax expense for the year indicated are as follows:
Particulars
Profit before tax
Indian statutory income tax rate
Tax at statutory income tax rate
Disallowable expenses
Non-taxable income*
Tax holidays and similar exemptions
Change in deferred tax balances due to change in income tax rate from 34.608% to 34.944%
Charge/(credit) in respect of earlier years
Unrecognised tax assets (net)
Other permanent differences
Total
*Including dividend income received from subsidiary
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
4,947
9,224
34.944%
34.608%
1,729
88
(1,984)
9
-
(1)
(30)
61
(128)
3,192
88
(865)
(8)
41
32
-
(512)
1,968
Certain businesses of the Company 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: 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 315
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The total effect of such tax holidays and exemptions was ` 9 Crore for the year ended March 31,2019 (March 31,2018: ` (8) Crore).
(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, 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 2019
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 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
Charged /
(credited) to
statement of profit
and loss
Charged /
(credited) to other
comprehensive
income
Exchange
difference
transferred to
translation of
foreign operation
(` in Crore)
Closing
balance as at
March 31,2019
416
3
(2)
-
(26)
-
(539)
15
(133)
-
-
(1)
(37)
-
-
-
(13)
(51)
155
7,766
-
-
-
-
-
-
-
155
(3)
(19)
(33)
112
(3,971)
(3,524)
(331)
(3)
Opening
balance as at
April1, 2018
7,195
(6)
(16)
4
138
(3,971)
(2,985)
(333)
26
Opening
balance as at
April 1, 2017
Charged /
(credited) to
statement profit
and loss
Charged /
(credited) to other
comprehensive
income
5,267
1,912
(5)
(20)
6
329
(3,971)
(3,322)
(242)
(1,958)
(1)
9
-
(191)
-
337
(98)
1,968
-
-
(5)
(2)
-
-
-
7
-
Exchange
difference
transferred to
translation of
foreign operation
(` in Crore)
Closing
balance as at
March 31,2018
16
7,195
-
-
-
-
-
-
-
16
(6)
(16)
4
138
(3,971)
(2,985)
(333)
26
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 Nil and ` 270 Crore as at March 31, 2019 and
March 31, 2018 respectively. The unused tax losses expire as detailed below :
Year ended
Nature of unrecognised
deferred tax assets
March 31, 2018
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
(d) Non- current tax assets
Non- current tax assets of ` 2,175 Crore and ` 2,429 Crore as at March 31, 2019 and March 31, 2018 respectively mainly
represents income tax receivable from Indian tax authorities by Vedanta Limited relating to the refund arising consequent to the
Scheme of Amalgamation & Arrangement made effective in August 2013 pursuant to approval by the jurisdiction High Court and
receivables relating to matters in tax disputes including tax holiday claim.
316
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
33. EARNINGS PER EQUITY SHARE
Particulars
Profit after tax and exceptional items
Less: Notional Preference Dividend *
Profit after tax and exceptional items attributable to equity share holders for Basic and Diluted EPS
Add/ (Less): Exceptional items (net of tax)
Profit after tax but before exceptional items attributable to equity share holders for Basic and Diluted EPS
Weighted Average no. of equity shares outstanding during the year for Basic and Dilutive EPS
Basic and Diluted Earnings per share after tax and exceptional items (in `)
Basic and Diluted Earnings 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.
34. DISTRIBUTIONS MADE AND PROPOSED
Particulars
Amounts recognised as distributions to equity shareholders:
Final dividend
Interim dividend (March 31, 2019 : `17.00/- and `1.85/- per share, March 31, 2018 : `21.20/- per share) a
Dividend distribution tax (DDT) on above b
Preference dividends on redeemable preference shares :
Preference dividends for the year : 7.5% p.a. (March 31, 2018: 7.5% p.a) c
Dividend distribution tax (DDT) on preference dividend c
Total
(` in Crore except as otherwise stated)
Year ended
March 31, 2019
5,075
-
5,075
(212)
4,863
372
13.65
13.08
1.00
Year ended
March 31, 2018
7,256
(17)
7,239
(4,465)
2,774
372
19.47
7.46
1.00
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
-
7,005
0
7,005
130
-
130
-
7,881
-
7,881
209
-
209
a) The Board of Directors of the Company declared the second dividend of ` 6,580 Crore for the financial year 2016-17 which
has been paid during the financial year 2017-18.
b) Tax on interim dividend (net of dividend from a subsidiary) u/s 115O of the Income Tax Act, 1961.
c) Dividend @ 7.5% p.a. on the redeemable preference shares of face value of ` 10/- per preference share for the period from
April 01, 2018 to October 27, 2018 and April 27, 2017 to March 31, 2018, as per their terms of issuance was declared during the
year ended March 31, 2019 and March 31, 2018 respectively. The same has been accounted for as interest cost and has been
recorded in the Statement of Profit and Loss. These preference shares were redeemed, along with dividend on October 26, 2018.
(refer note 29).
35. COMMITMENTS, CONTINGENCIES AND GUARANTEES
A) 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
Aluminium sector
Lanjigarh Refinery (Phase II)
Jharsuguda 1.25 MTPA smelter
Copper sector
Tuticorin Smelter 400 KTPA*
Others
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
2,781
2,338
1,443
460
2,794
589
8,067
1,335
491
2,758
520
7,442
*currently contracts are under suspension under the force majeure clause as per the contract
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 317
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Commitments related to the minimum work programme (Other than capital commitment)
Particulars
Oil & Gas sector
Cairn India (OALP - New Oil and Gas blocks)
Other Commitments
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.
B) Guarantees
The aggregate amount of indemnities and other guarantees
on which the Company does not expect any material losses,
was ` 27,577 Crore (March 31, 2018: ` 14,023 Crore).
The Company has given guarantees in the normal course of
business as stated below:
a) Guarantees and bonds advanced to the customs authorities
in India of ` 547 Crore relating to the export and payment of
import duties on purchases of raw material and capital goods
(March 31, 2018: ` 580 Crore).
b) Guarantees issued for Company’s share of minimum
work programme commitments of ` 2,367 Crore (March 31,
2018: ` 170 Crore).
c) Guarantees of ` 535 Crore issued under bid bond
(March 31, 2018: ` 12 Crore).
d) Bank guarantees of `115 Crore (March 31, 2018: ` 115
Crore) has been provided by the Company on behalf of Volcan
Investments Limited to Income tax department, India as a
collateral in respect of certain tax disputes.
e) The Company has given corporate guarantees, bank
guarantees and also assigned its bank limits to other group
companies majorly in respect of certain short-term and
long-term borrowings amounting to ` 17,507 Crore (` 11,961
Crore as on March 31, 2018). Refer Note 36.
f) Other guarantees worth ` 1,506 Crore (March 31, 2018:
` 1,186 Crore) issued for securing supplies of materials
and services, in lieu of advances received from customers,
litigation, for provisional valuation of custom duty and also
to various agencies, suppliers and government authorities
for various purposes. The Comapny does not anticipate any
liability on these guarantees.
C) Export Obligations
The Company has export obligations of ` 1,211 Crore
(March 31, 2018: ` 7,190 Crore) on account of concessional
rates of import duty paid on capital goods under the Export
Promotion Capital Goods Scheme and under the Advance
Licence Scheme for the import of raw material laid down by
the Government of India.
In the event of the Company’s inability to meet its obligations,
the Company’s liability would be ` 115 Crore (31 March 2018:
` 479 Crore) reduced in proportion to actual exports, plus
applicable interest.
The Company has given bonds of ` 61 Crore (31 March 2018:
` 68 Crore) to custom authorities against these export
obligations.
318
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
3,811
-
D) Contingent Liabilities
The Company discloses the following legal and tax cases as
contingent liabilities:
a) Vedanta Limited: Income tax
In March 2014, Vedanta Limited (notice was served on Cairn
India Limited which subsequently merged with Vedanta
Limited, accordingly now referred to as Vedanta Limited)
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. The 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 Vedanta Limited,
in the financial year 2006–2007, on which tax should have
been withheld by the Company. Pursuant to this various replies
were filed with the Tax Authorities. After several hearings, the
Income Tax Authority, in March 2015, issued an order holding
the Company as ‘assessee in default’ and raised a demand
totalling ` 20,495 Crore (including interest of ` 10,247 Crore).
The Company 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 the Company. The Company has challenged the
Commissioner of Income Tax’s (Appeals) order before the
Income Tax Appellate Tribunal (ITAT).
The Company 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 pending for adjudication before the Honourable
Delhi High Court.
Separately CUHL, on whom the primary liability of tax lies,
had received an Order from the ITAT in the financial year
2016-17 holding that the transaction is taxable in view of
the clarification made in the Act but also acknowledged that
being a retrospective transaction, interest would not be levied.
Hence affirming a demand of ` 10,247 Crore excluding the
interest portion that had previously been claimed. The tax
department has appealed this order before the Delhi High
Court. As a result of the above order from ITAT, the Company
considers the risk in respect of the interest portion of claim to
be remote. Further, as per the recent recovery notice dated
October 12, 2018 received from the Tax Recovery Officer
(TRO) appointed for CUHL, tax demand of CUHL of approx.
` 4,996 Crore along with interest is outstanding. Further, in
the said notice, tax department had also instructed to remit
the preference shares redemption amount including dividend
payable thereon to the TRO. Accordingly amount aggregating
to ` 607 Crore has been paid to the TRO on October 26, 2018
thus reducing the liability to ` 4,389 Crore. The Company has
also paid interim dividend for FY 2018-19 of ` 4 Crore to the
TRO. Accordingly, the Company has revised the contingent
liability to ` 4,385 Crore (March 31, 2018: ` 9,139 Crore).
In the event, the case is finally decided against the Company,
the demand payable along with interest as per the above
mentioned order would be ` 20,495 Crore, of which only
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS ` 4,385 Crore is considered as possible. Separately, but in
connection with this litigation, Vedanta Resources Limited
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 passed a favourable
order on jurisdiction and recently hearing on merits have
been completed and order will be passed on due course.
The Government of India has challenged the jurisdiction order
of Arbitration Tribunal before the High Court of Singapore.
b) Ravva Joint Operations arbitration proceedings
ONGC Carry
The Ravva Production Sharing Contract (PSC) obliges the
contractor parties to pay a proportionate share of ONGC’s
exploration, development, production and contract costs in
consideration for ONGC’s payment of costs related to the
construction and other activities it conducted in Ravva prior
to the effective date of the Ravva PSC (the ONGC Carry).
The question as to how the ONGC Carry is to be recovered
and calculated, along with other issues, was submitted to
an International Arbitration Tribunal in August 2002 which
rendered a decision on the ONGC Carry in favour of the
contractor parties (including Vedanta Limited (Cairn India
Limited which subsequently merged with Vedanta Limited,
accordingly now referred to as Vedanta Limited)) whereas
four other issues were decided in favour of Government
of India (GOI) in October 2004 (Partial Award). The GOI
then proceeded to challenge the ONGC Carry decision
before the Malaysian courts, as Kuala Lumpur was the seat
of the arbitration. The Federal Court of Malaysia upheld
the Partial Award. As the Partial Award did not quantify the
sums, therefore, contractor parties approached the same
Arbitration Tribunal to pass a Final Award in the subject matter
since it had retained the jurisdiction to do so. The Arbitral
Tribunal was reconstituted and the Final Award was passed
in October 2016 in Company’s favour. GOI’s challenge of the
Final Award has been dismissed by the Malaysian High Court
and the next appellate court in Malaysia i.e. Malaysian Court of
Appeal. GOI then filed an appeal at Federal Court of Malaysia.
The matter was heard on February 28, 2019 and the Federal
Court dismissed GOI’s leave to appeal. The Company has also
filed for the enforcement of the Partial Award and Final Award
with Delhi High Court.
Base Development Cost
Ravva joint operations had received a claim from the Ministry
of Petroleum and Natural Gas, Government of India (GOI)
for the period from 2000-2005 for `892 Crore (US$ 129
million) for an alleged underpayment of profit petroleum (by
recovering higher Base Development Costs (“BDC”) against
the cap imposed in the PSC) to the Government of India (GOI),
out of which, Vedanta Limited’s (Cairn India Limited which
subsequently merged with Vedanta Limited, accordingly now
referred to as Vedanta Limited) share will be `201 Crore (US$
29 million) plus interest. Joint venture partners initiated the
arbitration proceedings and Arbitration Tribunal published the
Award allowing claimants (including the Company) to recover
the development costs spent to the tune of ` 1,923 Crore
(US$ 278 million) and disallowed over run of ` 154 Crore (US$
22 million) spent in respect of BDC along with 50% legal costs.
The High Court of Kuala Lumpur as well as Court of Appeal
dismissed GOI’s application of setting aside the part of the
Award. GOI challenge to the same before the Federal Court of
Malasia was also dismissed by the Federal Court on May 17,
2016. The Company has filed an application for enforcement
of award before Delhi High Court.
In connection with the above two matters, the Company
has received an order dated October 22, 2018 from the
GOI directing oil marketing companies (OMCs) who are the
offtakers for Ravva to divert the sale proceeds to Government’s
account. GOI alleges that the Ravva Joint Venture has short
paid profit petroleum of ` 2,172 Crore (US$ 314 million)
(the Company share approximately - ` 643 Crore (US$ 93
million)) on account of the two disputed issues of ONGC
Carry and BDC matters. Against an interim application, filed
by the Company and other joint venture partner, seeking stay
of such action from GOI, before the Delhi High Court, where
enforcement petitions for both matters are pending, the Court
directed the OMCs to deposit above sums to the Court for
both BDC and ONGC Carry matters. However, the Company
(and other joint venture partner) has been given the liberty
to seek withdrawal of the proportionate amounts (fallen due
as of the date of Court order) from the Court upon furnishing
a bank guarantee (BG) of commensurate value. The interim
application is pending adjudication.
While the Company does not believe the GOI will be
successful in its challenge, if the Arbitral Awards in above
matters are reversed and such reversals are binding, the
Company would be liable for approximately ` 643 Crore (US$
93 million) plus interest (March 31, 2018: ` 605 Crore (US$ 93
million) plus interest).
c) 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 respective High Courts for final
determination but retained the issue of jurisdiction for levy on
imported goods, for determination by the regular bench of the
Supreme Court. Following the order of the Supreme Court, the
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 judgment, imported goods
will rank pari 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 SEZ
based on the definition of ‘local area’ under the Odisha
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 319
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Entry Tax Act which is very clear and does not include a SEZ.
In addition, the Government of Odisha further through its SEZ
Policy 2015 and the operational guidelines for administration
of this policy dated August 22, 2016, exempted the entry tax
levy on SEZ operations.
The total claims against the Company are ` 1,065 Crore
(March 31, 2018: ` 1,020 Crore) net of provisions made.
d) Miscellaneous disputes- Income tax
The Company is involved in various tax disputes amounting to
`486 Crore (March 31, 2018: `1,430 Crore) relating to income
tax for the periods for which initial assessments have been
completed. These mainly relate to the disallowance of tax
holiday for 100% Export Oriented Undertaking under section
10B of the Income Tax Act, 1961, disallowance of tax holiday
benefit on production of gas under section 80IB of the Income
Tax Act, 1961, on account of depreciation disallowances of
the Income Tax Act 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.
e) 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 Company’s returns or other claims.
The approximate value of claims (excluding the items as set
out separately above) against the Company totals to ` 1,957
Crore (March 31, 2018: ` 1,988 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, 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 flows or the financial position of the Company.
E) Leases
Operating lease commitments – 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.
There are no restrictions imposed by lease arrangements
and there are no sub-leases. There are no contingent rents.
The total of the future minimum lease payments under
non-cancellable leases are as under:
Particulars
Within one year
Later than one year but not later than five years
Later than five years
Total
Lease payments recognized as expenses on non-cancellable lease during the year is `12 Crore (March 31, 2018: ` 4 Crore).
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
5
6
-
11
2
0
-
2
320
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
36. RELATED PARTY DISCLOSURES
List of related parties and relationships
A) Entities controlling the Company (Holding Companies)
Volcan Investments Limited
Volcan Investments Cyprus Limited
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 Limited (formerly 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 Grid Ventures Limited
Sterlite Power Transmission limited
C) Associates (with whom transactions have taken place)
Gaurav Overseas Private Limited
Roshkor Township Pty Ltd.
D) Subsidiaries
Amica Guesthouse (Proprietary) Limited
AvanStrate Inc, Japan
AvanStrate Korea Inc, Korea
AvanStrate Taiwan Inc, Taiwan
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 (Pty) Limited
CIG Mauritius Holdings Private Limited
CIG Mauritius Private Limited
Copper Mines of Tasmania (Proprietary) Limited
Electrosteel Steels Limited**
Fujairah Gold FZC
Goa Sea Port Private Limited
Hindustan Zinc Limited
Killoran Lisheen Finance Limited
Killoran Lisheen Mining Limited
Lakomasko BV
Lisheen Milling Limited
Lisheen Mine Partnership
Malco Energy Limited
Maritime Ventures Private Limited
Monte Cello BV
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 Ports Limited
Talwandi Sabo Power Limited
Thalanga Copper Mines (Proprietary) Limited
THL Zinc Holding BV
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
Vedanta Star Limited***
E) Post retirement benefit plan
Sesa Group Employees Provident Fund
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
Runaya Refinery LLP
Janhit Electoral Trust
* Under liquidation
** Acquired during the year
***
Incorporated during the year
Ultimate Controlling party
As at March 31, 2019, the Group is majorly owned by Twin
Star Holdings Limited, Finsider International Company Limited,
Westglobe Limited and Welter Trading Limited which are
in turn wholly-owned subsidiaries of Vedanta Resources
Limited (formerly Vedanta Resources Plc) (Intermediate
Holding Company). The ultimate controlling party of the
Group is Volcan (Volcan Investments Limited and its wholly
owned subsidiary Volcan Investments Cyprus Limited), which
is controlled by the Chairman Emeritus, Mr. Anil Agarwal
and persons related to him. Volcan Investment Limited,
Volcan Investments Cyprus Limited, Twin Star Holdings
Limited, Finsider International Company Limited, Westglobe
Limited and Welter Trading Limited do not produce Group
financial statements.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 321
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The Group enters into transactions in the normal course of business with its related parties, including its parent Vedanta
Resources Limited (formerly Vedanta Resources Plc), and the companies over which it has significant influence. A summary of
significant related party transactions for the year ended March 31, 2019 and 2018 are noted below.
Particulars
Income :
(i)
Revenue from operations
Fujairah Gold FZC
Cairn India Holdings Limited
Electrosteel Steels Limited
Sterlite Technologies Limited
Sterlite Power Transmission Limited
Bharat Aluminium Company 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
Electrosteel Steels Limited
Talwandi Sabo Power Limited
Sterlite Iron and Steel Company Limited
Bharat Aluminium Company Limited
Sterlite Ports Limited
Vizag General Cargo Berth Private Limited
Paradip Multi Cargo Berth Private Limited
Sterlite Power Transmission limited
Cairn India Holdings Limited
Sesa Resources Limited
Sesa Mining Corporation Limited
Copper Mines of Tasmania Pty Limited
Konkola Copper Mines Plc
Fujairah Gold FZC
Vedanta Star Limited
Black Mountain Mining (Proprietary) Limited
b)
Dividend income
Hindustan Zinc Limited
Sterlite Technologies Limited
India Grid Trust
c) Outsourcing service fees
Vedanta Resources Limited (formely Vedanta Resources Plc)
d) Other non-operating income
Hindustan Zinc Limited
Sterlite Power Transmission Limited
322
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
41
0
2
0
864
1,813
0
0
-
4
-
2,308
-
-
2
954
935
12
2
0
10
2
2,724
4,225
-
1
23
0
-
0
1
0
4
8
4
1
0
5
1
21
0
69
0
-
-
0
1
0
1
0
1
7
3
-
0
4
3
-
-
20
5,485
2,195
1
15
1
8
5,501
2,203
3
3
-
-
-
3
3
1
0
1
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Particulars
Expenditure and other transactions
i)
Purchase of goods/ services
Konkola Copper Mines Plc
Hindustan Zinc Limited
Sesa Resources Limited
Bharat Aluminium Company Limited
Maritime Ventures Private Limited
Sterlite Power Transmission limited
Sesa Mining Corporation Limited
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Runaya Refinery LLP
Fujairah Gold FZC
ii)
Power Charges
Malco Energy Limited
iii) Stock options expenses/(recovery)
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Electrosteel Steels Limited
Hindustan Zinc Limited
Bharat Aluminium Company Limited
Talwandi Sabo Power Limited
Malco Energy Limited
Black Mountain Mining (Proprietory) Limited
Vizag General Cargo Berth Private Limited
Konkola Copper Mines Plc
Fujairah Gold FZC
iv) Allocation of Corporate Expenses
Hindustan Zinc Limited
Bharat Aluminium Company Limited
Malco Energy Limited
v) Management and Brand Fees paid/ (recovered)
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Hindustan Zinc Limited
Bharat Aluminium Company Limited
vi)
(Recovery of) / Reimbursement to /for other expenses (net)
Bharat Aluminium Company Limited
Hindustan Zinc Limited
Malco Energy Limited
Electrosteel Steels Limited
Vedanta Resources Limited (formerly 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
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
351
-
3
741
8
-
1
1
11
1
-
657
16
48
303
2
2
213
-
6
-
6
1,117
1,253
-
-
14
(1)
(23)
(10)
(2)
(0)
(1)
(0)
(0)
(0)
(23)
(78)
(43)
-
(121)
325
(9)
(5)
311
18
18
49
-
(25)
(11)
(2)
(1)
-
(0)
(0)
(0)
10
(73)
(40)
(1)
(114)
345
(10)
(5)
330
(80)
(187)
(1)
(1)
(3)
1
(3)
3
4
(0)
(0)
(1)
(4)
(1)
5
(1)
-
11
(5)
-
-
(0)
(0)
(2)
(3)
(0)
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 323
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Particulars
Cairn Energy Hydrocarbons Limited
Goa Sea Port Private Limited
Maritime Ventures Private Limited
Namzinc (Pty) Limited
Sterlite Power Transmission Limited
Vedanta Lisheen Mining Limited
Vedanta Star Limited
Volcan Investments Limited
Cairn India Holdings Limited
vii) Corporate Social Responsibility expenditure/ Donation
Vedanta Foundation
Janhit Electoral Trust
Cairn Foundation
viii) Contribution to Post retirement employee benefit trust
Sesa Group Employees Provident Fund
Sesa Group Employees Gratuity Fund and Sesa Group Executives Gratuity Fund
Sesa Group Executives Superannuation Scheme Fund
ix)
x)
xi)
Transfer of Assets
Purchase of Assets
Hindustan Zinc Limited
Sesa Resources Limited
Sesa Mining Corporation Limited
Dividend paid
Twin Star Holdings Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Vedanta Limited ESOS Trust
a. Financial guarantees given
Talwandi Sabo Power Limited
Black Mountain Mining (Proprietary) Limited
Fujairah Gold FZC.
Vizag General Cargo Berth Private Limited
Vedanta Star Limited
Cairn India Holdings Limited
b. Financial guarantees relinquished
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Bharat Aluminium Company Limited
Western Cluster Limited
Cairn India Holdings Limited
xii) Banking Limits assigned to/utilised/renewed for group companies
Electrosteel Limited
Copper Mines of Tasmania Proprietary Limited
Thalanga Copper Mines Proprietary Limited
xiii) Sale/ (Redemption) of Investments
India Grid Trust
324
Year ended
March 31, 2019
0
(0)
1
(0)
0
(0)
(18)
(1)
-
(104)
(` in Crore)
Year ended
March 31, 2018
-
(2)
2
(0)
-
(0)
-
(2)
0
(184)
5
3
19
27
5
0
2
7
0
4
3
7
2,600
757
84
72
26
3,539
2,800
477
851
-
3,400
-
7,528
2,504
-
-
-
416
2,920
730
30
23
783
-
-
0
-
16
16
5
1
2
8
0
-
-
0
2,924
851
94
81
20
3,970
3,600
-
-
445
-
4,870
8,915
5,293
400
2,500
32
1,646
9,871
-
31
23
54
(0)
(0)
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Particulars
Balances as at year end
a)
Trade Receivables
Fujairah Gold FZC
Cairn Lanka (Private) Ltd
Bharat Aluminium Company Limited
Electrosteel Steels Limited
Sterlite Power Transmission Limited
Vizag General Cargo Berth Private Limited
Maritime Ventures Private Limited
Talwandi Sabo Power Limited
Hindustan Zinc Limited
Konkola Copper Mines Plc
Western Cluster Limited
b)
Loans given
Sterlite Ports Limited
Vedanta Star Limited
Sesa Mining Corporation Limited
Paradip Multi Cargo Berth Private Limited
Sesa Resources Limited
Sterlite Iron and Steel Company Limited
Vedanta Limited ESOS Trust
c)
Other receivables and advances
Talwandi Sabo Power Limited
Sesa Resources Limited
Bharat Aluminium Company Limited
Electrosteel Steels Limited
Vedanta Star Limited
Sterlite Iron and Steel Company Limited
Hindustan Zinc Limited
Malco Energy Limited
Konkola Copper Mines Plc
Sterlite Ports 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 (Proprietary) Limited
Namzinc (Pty) Limited
Fujairah Gold FZC
Sterlite Power Transmission Limited
Goa Sea Port Private Limited
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Vedanta Foundation
d)
Dividend receivable
Hindustan Zinc Limited
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
0
0
74
0
0
1
0
0
0
0
-
75
4
197
26
0
79
5
351
662
37
4
84
1
27
13
10
1
98
1
1
5
1
4
0
1
0
1
0
3
27
-
319
-
-
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
1,646
1,646
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 325
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Particulars
e)
Trade Payables
Hindustan Zinc Limited
Sesa Mining Corporation Limited
Malco Energy Limited
Bharat Aluminium Company Limited
Black Mountain Mining (Pty) Limited
Konkola Copper Mines Plc
Cairn Energy Hydrocarbons Ltd
Western Cluster Limited
Vizag General Cargo Berth Private Limited
Sterlite Power Transmission Limited
Maritime Ventures Private Limited
Talwandi Sabo Power Limited
f)
Other payables
Malco Energy Limited
Hindustan Zinc Limited
Vedanta Resources Limited (formerly Vedanta Resources plc)
Bharat Aluminium Company Limited
Talwandi Sabo Power Limited
Sesa Group Employees Gratuity Fund and Sesa Group Executives Gratuity Fund
Maritime Ventures Private Limited
Fujairah Gold FZC
Vizag General Cargo Berth Private Limited
Namzinc (Proprietary) Limited
Sesa Group Employees Provident Fund
Sesa Group Executives Superannuation scheme
Cairn Foundation
Sesa Resources Limited and Sesa Mining Corporation Limited Employees Superannuation Fund
g)
Other Current liabilities- Advance from Customers
Sterlite Power Transmission limited
h)
Banking Limits assigned to/utilised/renewed for group companies
Vizag General Cargo Berth Private Limited
Volcan Investments Limited*
Copper Mines of Tasmania Pty Limited
Thalanga Copper Mines Pty Limited
Electrosteel Steels Limited
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
-
-
-
1
-
10
1
0
0
-
1
0
13
0
0
76
0
-
5
-
-
0
-
2
0
8
0
91
2
2
10
8
0
0
0
38
1
-
0
0
0
0
57
-
-
13
0
0
4
1
0
0
0
2
0
11
0
31
-
-
38
115
30
23
730
936
38
115
31
23
-
207
* 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
i)
Financial guarantee given
Talwandi Sabo Power Limited
Black Mountain Mining (Pty) Limited
Vizag General Cargo Berth Private Limited
Fujairah Gold FZC
Vedanta Star Limited
Cairn India Holdings Limited
j)
Commission payable to KMP
326
8,496
477
445
851
3,400
3,017
16,686
5
9,000
-
445
-
-
3,224
12,669
3
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Particulars
(x)
a)
Transactions during the year
Loans given during the year
Paradip Multi Cargo Berth Private Limited
Malco Energy Limited
Sterlite Ports Limited
Sesa Resources Limited*
Sterlite Iron and Steel Company Limited
Sesa Mining Corporation Limited*
Vedanta Star Limited
Vedanta Limited ESOS Trust
*Sesa Resources Limited includes ` 69 Crore as advance/ interest receivable converted to loan during the year.
b)
Loans repaid during the year
Sesa Resources Limited
Sterlite Ports Limited
Vizag General Cargo Berth Private Limited
Sterlite Iron and Steel Company Limited
Vedanta Limited ESOS Trust*
Malco Energy Limited
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
0
-
0
79
0
26
197
147
449
-
-
-
0
30
-
30
-
18
-
5
0
-
-
202
225
138
1
8
-
58
18
223
* The Company reduced its loan receivable from Vedanta Limited ESOS Trust by ` 2 Crore and ` 12 Crore on exercise of stock options by employees during
the year March 31, 2019 and March 31, 2018 respectively.
c)
Investments made during the year
Gaurav Overseas Private Limited
Malco Energy Limited
Vedanta Star Limited
-
-
1,770
1,770
0
18
-
18
During previous year, Compulsorily Convertible Debentures (CCDs) issued by Vizag General Cargo Berth Private Limited (VGCB)
to the Company for an amount `150 Crore 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.
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
41
1
5
47
33
2
6
41
0
4
0
0
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
Commision to Key Management Personnel
Commision and sitting fees to Independent directors
Dividend to key management personnel
Dividend to relatives of key management personnel
1
4
0
0
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 2019, 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.
There are no outstanding debts or loans due from directors or other officers (as defined under Section 2(59) of the Companies
Act, 2013) of the Company.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 327
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
37. SUBSEQUENT EVENTS
There are no material adjusting or non-adjusting subsequent events, except as already disclosed.
38. 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 Subsidiaries
Principal
activities
Country of
Incorporation
Immediate
holding company
The Company’s / Immediate holding
Company’s percentage holding
(in %)
As at
March 31, 2019
As at
March 31, 2018
Cairn Energy India Pty Limited
Oil and gas exploration,
development and
production
Australia
Cairn India Holdings Limited
100.00
100.00
Copper mining
Australia
Monte Cello BV
100.00
100.00
Copper mining
Australia
Monte Cello BV
100.00
100.00
Vedanta Limited
51.00
51.00
Vedanta Star Limited
90.00
-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Copper Mines of Tasmania Pty Limited
(“CMT”)
Thalanga Copper Mines Pty Limited
(“TCM”)
Bharat Aluminium Company Limited
(“BALCO”)
Electrosteel Steels Limited3
Goa Sea Port Private Limited
Hindustan Zinc Limited (“HZL”)
MALCO Energy Limited (“MEL”)
Aluminium mining and
smelting
Manufacturing of Steel
& DI Pipe
Infrastructure
Zinc mining and
smelting
Power generation
Maritime Ventures Private Limited
Infrastructure
Paradip Multi Cargo Berth Private Limited
Infrastructure
Sesa Mining Corporation Limited
Sesa Resources Limited (“SRL”)
Sterlite Ports Limited
Iron ore mining
Iron ore mining
Infrastructure
Talwandi Sabo Power Limited (“TSPL”)
Power generation
15 Vedanta Star Limited***
Operating and holding
Company
16 Vizag General Cargo Berth Private Limited
Infrastructure
India
India
India
India
India
India
India
India
India
India
India
India
India
Sterlite Ports Limited
Vedanta Limited
Vedanta Limited
Sterlite Ports Limited
Vedanta Limited
Sesa Resources Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
17
18
19
20
Killoran Lisheen Finance Limited
Investment company
Ireland
Vedanta Lisheen Holdings Limited
Killoran Lisheen Mining Limited
Zinc and lead mining
Ireland
Vedanta Lisheen Holdings Limited
Lisheen Milling Limited
Lisheen Mine Partnership
Manufacturing
Ireland
Vedanta Lisheen Holdings Limited
Mining Partnership Firm Ireland
50% each held by Killoran
Lisheen Mining Limited &
Vedanta Lisheen Mining Limited
21 Vedanta Exploration Ireland Limited
Exploration company
Ireland
Vedanta Lisheen Holdings Limited
22 Vedanta Lisheen Holdings Limited
Investment company
Ireland
THL Zinc Holing BV
23 Vedanta Lisheen Mining Limited
Zinc and lead mining
Ireland
Vedanta Lisheen Holdings Limited
24 AvanStrate Inc. (‘ASI’)1
Operating and holding
Company
Japan
Cairn India Holdings Limited
25 Cairn India Holdings Limited
Investment company
Jersey
Vedanta Limited
26 Western Cluster Limited
27
Bloom Fountain Limited
Iron ore mining
Liberia
Bloom Fountain Limited
Operating (Iron ore) and
Investment Company
Mauritius
Vedanta Limited
28 CIG Mauritius Holdings Private Limited
Investment Company Mauritius
29 CIG Mauritius Private Limited
Investment Company Mauritius
Cairn Energy Hydrocarbons
Limited
CIG Mauritius Holdings Private
Limited
30
31
32
33
34
Sesa Sterlite Mauritius Holdings Limited *
Investment Company Mauritius
Bloom Fountain Limited
THL Zinc Ltd.
Investment company
Mauritius
THL Zinc Ventures Ltd
THL Zinc Ventures Limited
Investment company
Mauritius
Vedanta Limited
Twin Star Energy Holdings Limited (“TEHL”)* Investment company
Mauritius
Bloom Fountain Limited
Twin Star Mauritius Holdings Limited
(“TMHL”) *
Investment company
Mauritius
Twin Star Energy Holdings
Limited
35 Amica Guesthouse (Proprietary) Limited
Accommodation and
catering services
Namibia
Skorpion Zinc (Proprietary)
Limited
100.00
100.00
328
100.00
64.92
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.63
100.00
100.00
100.00
100.00
64.92
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.63
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
S. No Subsidiaries
36 Namzinc (Proprietary) Limited
Principal
activities
Country of
Incorporation
Immediate
holding company
The Company’s / Immediate holding
Company’s percentage holding
(in %)
As at
March 31, 2019
As at
March 31, 2018
Owns and operates zinc
refinery
Namibia
Skorpion Zinc (Proprietary) Limited
100.00
100.00
37
Rosh Pinah Healthcare (Proprietary) Limited Leasing out of medical
Namibia
Skorpion Zinc (Proprietary) Limited
69.00
69.00
38
Skorpion Mining Company (Proprietary)
Limited (‘NZ’)
equipment and building
and conducting
services related thereto
Exploration,
development,
production and sale of
zinc ore
Namibia
Skorpion Zinc (Proprietary) Limited
100.00
100.00
39
40
Skorpion Zinc (Proprietary) Limited (‘SZPL’) Operating (Zinc) and
Investment Company
Namibia
THL Zinc Namibia Holdings
(Proprietary) Limited
100.00
100.00
THL Zinc Namibia Holdings (Proprietary)
Limited (“VNHL”)
Mining and Exploration
and Investment
company
Namibia
THL Zinc Ltd
100.00
100.00
41
Lakomasko BV
Investment company
Netherlands THL Zinc Holding BV
42 Monte Cello BV (“MCBV”)
Investment company
Netherlands Vedanta Limited
43
THL Zinc Holding BV
Investment company
Netherlands Vedanta Limited
Scotland
Cairn India Holdings Limited
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
44 Cairn Energy Discovery Limited
45 Cairn Energy Gujarat Block 1 Limited
46 Cairn Energy Hydrocarbons Limited
47 Cairn Exploration (No. 2) Limited
48
Black Mountain Mining (Proprietary)
Limited
49 Cairn South Africa Pty Limited
50 AvanStrate Korea Inc1
51 Cairn Lanka Private Limited
52 AvanStrate Taiwan Inc1
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Exploration,
development, production
and sale of zinc, lead,
copper and associated
mineral concentrates
Oil and gas exploration,
development and
production
Manufacturer of LCD
glass substrate
Oil and gas exploration,
development and
production
Manufacturer of LCD
glass substrate
Scotland
Cairn India Holdings Limited
100.00
100.00
Scotland**
Cairn India Holdings Limited
100.00
100.00
Scotland
Cairn India Holdings Limited
100.00
100.00
South Africa THL Zinc Ltd
74.00
74.00
South Africa Cairn Energy Hydrocarbons
100.00
100.00
Limited
South Korea Avanstrate (Japan) Inc.
51.63
51.63
Sri Lanka
CIG Mauritius Private Limited
100.00
100.00
Taiwan
Avanstrate (Japan) Inc.
51.63
51.63
53
Fujairah Gold FZC
Gold & silver processing United Arab
Malco Energy Limited
100.00
100.00
54
Sterlite (USA) Inc.*
Investment company
Emirates
United States
of America
Vedanta Limited
100.00
100.00
*Under liquidation **Principal place of business is in India ***Incorporated during the current year
1 On December 28, 2017, the Group through its wholly owned subsidiary, acquired 51.6% equity stake in AvanStrate Inc. (ASI)
2 The Group also has interest in certain trusts which are neither significant nor material to the Group.
3 On June 4, 2018, the Group through its wholly owned subsidiary, acquired 90.0% equity stake in Electrosteel Steels Limited (ESL)
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 329
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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:
Oil & gas blocks/ fields
Operating Blocks
Ravva block - Exploration, Development and Production
CB-OS/2 – Exploration
CB-OS/2 - Development & production
RJ-ON-90/1 – Exploration
RJ-ON-90/1 – Development & production
Non-Operating Blocks
KG-ONN-2003/11
Area
Krishna Godavari
Cambay Offshore
Cambay Offshore
Rajasthan Onshore
Rajasthan Onshore
Participating Interest (%)
As at
March 31, 2019
As at
March 31, 2018
22.50
60.00
40.00
50.00
35.00
22.50
60.00
40.00
50.00
35.00
Krishna Godavari Onshore
49.00
49.00
(1) Operatorship has been transferred to Oil and Natural Gas Corporation (ONGC) w.e.f. July 7, 2014
(2) PR - OSN - 2004/1 block was relinquished on June 30, 2017.
c) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the Company as at March 31, 2019 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
1
2
Roshkor Township (Pty) Limited
Gaurav Overseas Private Limited
S. No. Jointly controlled entities
1
2
3
Rampia Coal Mines and Energy Private Limited
Madanpur South Coal Company Limited
Goa Maritime Private Limited
Country of
incorporation
Namibia
India
% Ownership interest
As at
March 31, 2019
As at
March 31, 2018
50.00
50.00
50.00
50.00
Country of
incorporation
As at
March 31, 2019
As at
March 31, 2018
% Ownership interest
India
India
India
17.39
18.05
50.00
17.39
18.05
50.00
39 (a) The Company has incurred an amount of ` 52 Crore (March 31, 2018: ` 45 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)
Construction/acquisition of assets
ii) On purposes other than (i) above (for CSR projects)
Total
*Includes ` 24 Crore (March 31,2018: ` 16 Crore) paid to related party (Refer Note 36)
As at March 31, 2019
As at March 31, 2018
In- Cash
Yet to be
Paid in Cash
In- Cash
Yet to be
Paid in Cash
(` in Crore)
13
-
36
36
-
16
16
9
-
29
29
-
16
16
330
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(b) 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, 2019
As at
March 31, 2018
59
84
-
-
-
-
-
-
-
-
-
-
(c ) Loans and Advance(s) in the nature of Loan (Regulation 34 of Listing Obligations & Disclosure Requirements):
(a) Name of the Company
Relationship
Paradip Multi Cargo Berth Private Limited Wholly owned Subsidiary
Sterlite Ports Limited
Wholly owned Subsidiary
Sterlite Iron and Steel Company Limited
Fellow Subsidiary
Sesa Resources Limited *
Vedanta Star Limited
Wholly owned Subsidiary
Wholly owned Subsidiary
Sesa Mining Corporation Limited
Wholly owned Subsidiary
Balance
as at
March 31, 2019
MaximumAmount
Outstanding
during the year
(` in Crore)
Balance
as at
March 31, 2018
0
4
5
79
197
26
0
4
5
79
197
26
0
4
5
-
-
-
* Sesa Resources Limited and includes ` 69 crores as advance/interest receivable converted to loan during the year.
(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
40 (a) Acquisition of new hydrocarbon blocks
In August, 2018, the Company was awarded 41 hydrocarbon
blocks out of 55 blocks auctioned under the open acreage
licensing policy (OALP) by Government of India (GOI).
The blocks awarded to the Company comprise of 33 onshore
and 8 offshore blocks. The Company will share a specified
proportion of the net revenue from each block with GOI and
has entered into 41 separate revenue sharing contracts (RSC)
on October 01, 2018.
The bid cost of ` 3,811 Crore represents Company’s
total committed capital expenditure on the blocks for the
committed work programme during the exploration phase.
The Company has provided bank guarantees for minimum
work programme commitments amounting to ` 2,268
Crore for the 41 exploration blocks. These have been
disclosed in Note 35.
(b) 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 (2018)”. The changes to the reserves
are generally on account of future development projects,
application of technologies such as enhanced oil recovery
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 331
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
techniques and true up of the estimates. The management’s internal estimates of hydrocarbon reserves and resources at the
period end, are as follows:
Particulars
Rajasthan MBA Fields
Rajasthan MBA EOR
Country
India
India
Rajasthan Block Other Fields
India
Ravva Fields
CBOS/2 Fields
Other fields
Total
India
India
India
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, 2019
As at
March 31, 2018
As at
March 31, 2019
As at
March 31, 2018
As at
March 31, 2019
As at
March 31, 2018
2,288
-
3,405
724
254
335
2,288
-
3,460
733
251
335
362
293
428
39
33
40
371
335
430
45
34
48
7,006
7,067
1,195
1,263
127
103
150
9
13
22
423
130
117
150
10
13
24
444
The Company’s net working interest proved and probable reserves is as follows:
Particulars
Reserves as of March 31, 2017*
Additions / (revision) during the year
Production during the year
Reserves as of March 31, 2018**
Additions / (revision) during the year
Production during the year
Reserves as of March 31, 2019***
Proved and probable
reserves
Proved and probable
reserves (developed)
Oil
Gas
Oil
(mmstb)
(bscf)
(mmstb)
62
15
(22)
55
132
(23)
164
29
8
(6)
31
117
(8)
140
53
8
(22)
39
78
(23)
94
Gas
(bscf)
12
13
(6)
19
60
(8)
71
* 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)
*** Includes probable oil reserves of 60.77 mmstb (of which 9.80 mmstb is developed) and probable gas reserves of 47.86 bscf (of which 15.07 bscf is developed)
# The increase in reserve is on account of PSC extension for the Rajasthan and Ravva block. For more details, refer note 3(c)(A)(xi).
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
(c) Pursuant to Management Committee recommendation and minutes of Empowered Committee of Secretaries (ECS) filed by
GoI, Vedanta Limited had considered cost recovery of ` 567 Crore (US$ 88 million) in FY 2018, being the cost incurred over the
initially approved FDP of Pipeline Project. Vedanta Limited’s claim for the resultant profit petroleum of ` 149 Crore (US$ 22 million)
(refer note 19), which had been previously paid, has been disputed by the GoI. The Company believes that it has a good case on
merits to recover the amount and has therefore treated it as a non-current recoverable amount.
332
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
41 OTHER NOTES
1) 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 Hon’ble High Court of Madras and the Hon’ble 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 Hon’ble 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 Hon’ble Supreme Court and also by
a creditor and a shareholder of the Company. The said petitions are currently pending for hearing.
As per our report of even date
For and on behalf of the 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: Mumbai
Date: May 07, 2019
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 333
Notes forming part of the financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Independent Auditor’s Report
To the Members of Vedanta Limited
REPORT ON THE AUDIT OF THE CONSOLIDATED IND AS
FINANCIAL STATEMENTS
OPINION
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, 2019, the consolidated Statement of Profit and
Loss, including other comprehensive income, the consolidated
Cash Flow Statement and the consolidated Statement of
Changes in Equity for the year then ended, and notes to the
consolidated Ind AS financial statements, including a summary
of significant accounting policies and other explanatory
information (hereinafter referred to as “the consolidated Ind AS
financial statements”).
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 Companies Act, 2013, as
amended (“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, 2019, their consolidated profit including other
comprehensive income, their consolidated cash flows and
the consolidated statement of changes in equity for the year
ended on that date.
BASIS FOR OPINION
We conducted our audit of the consolidated Ind AS
financial statements in accordance with the Standards on
Auditing (SAs), as specified under section 143(10) of the
Act. Our responsibilities under those Standards are further
described in the ‘Auditor’s Responsibilities for the Audit of
the Consolidated Ind AS Financial Statements’ section of
our report. We are independent of the Group in accordance
with the ‘Code of Ethics’ issued by the Institute of Chartered
Accountants of India together with the ethical requirements
that are relevant to our audit of the financial statements under
the provisions of the Act and the Rules thereunder, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements and the Code of Ethics. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the
consolidated Ind AS financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
consolidated Ind AS financial statements for the financial year
ended March 31, 2019. These matters were addressed in
the context of our audit of the consolidated Ind AS financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have determined the matters described below to be
the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the consolidated
Ind AS financial statements section of our report, including
in relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond to
our assessment of the risks of material misstatement of the
consolidated Ind AS financial statements. The results of
audit procedures performed by us and by other auditors of
components not audited by us, as reported by them in their
audit reports furnished to us by the management, including
those procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying
consolidated Ind AS financial statements.
Key audit matters
How our audit addressed the key audit matter
Recoverability of carrying value of property plant and equipment, capital work in progress and exploration intangible assets under
development (as described in note 3c(A)(ii), 3c(A)(iii), 3c(A)(x), 6 and 33 of the consolidated Ind AS financial statements)
As at March 31, 2019, the carrying value of property, plant and
equipment, capital work in progress and exploration intangible
assets under development was Rs. 121,356 crore. We focused our
efforts on the Cash Generating Units (“CGUs”) of (a) Tuticorin within
the copper segment; and (b) Krishna Godavri basin within the oil and
gas segment, as they had impairment and/or impairment reversal
indicators.
factors impacting the Company, whether there were any
indicators of impairment (or reversal of impairment) in line with
Ind AS 36.
• Critically assessed through an analysis of internal and external
Our audit procedures included the following:
Recoverability of property plant and equipment, capital work in
progress and exploration intangible assets under development has
been identified as a key audit matter due to :
• The significance of the carrying value of assets being assessed.
• Specifically in relation to the CGUs where impairment and
impairment reversal indicators were identified, obtained
and evaluated the valuation models used to determine the
recoverable amount by challenging the key assumptions used by
management including:
− Considering forecasted volumes in relation to asset
• The size of impairment charges and reversals in earlier years.
development plans.
• The assessment of the recoverable amount of the Group’s CGUs
− Critically assessing management’s forecasting accuracy by
involves significant judgements about the future cash flow
forecasts and the discount rate that is applied.
comparing prior year forecasts to actual results and assessing
the potential impact of any variances.
• The withdrawal of the Holding Company’s licenses to operate
in current year in one of the jurisdictions’ and consequential
litigation.
− Corroborating the price assumptions used in the models
against analyst consensus.
334
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Key audit matters
The key judgements and estimates centered on the likely outcome
of the litigations, cash flow forecasts, prices and discount rate
assumptions. An impairment reversal of Rs. 261 crore was recorded
in the oil and gas segment during the year (refer note 33).
How our audit addressed the key audit matter
− Testing the appropriateness of the weighted average cost
of capital used to discount the impairment models through
engaging valuation experts.
− Testing the integrity of the models together with their clerical
The key judgements and estimates centered on the likely outcome
of the litigations, cash flow forecasts, prices and discount rate
assumptions. An impairment reversal of Rs. 261 crore was recorded
in the oil and gas segment during the year (refer note 33).
accuracy.
Additionally, wherever impairment trigger arose due to withdrawal
of the Holding Company’s license to operate, we inspected the
external legal opinions in respect of the merits of the case and
critically assessed management’s position through discussions with
the legal counsel to determine the basis of their conclusion.
•
Assessed the competence and objectivity of the external experts,
to satisfy ourselves that these parties are appropriate in their roles
within the estimation process.
•
Assessed the adequacy of the disclosures made by the Group in
this regard.
Revenue recognition (as described in note 3a(C), 3c(A)(xi), 3c(B)(iii) and 25 of the consolidated Ind AS financial statements)
For the year ended March 31, 2019 the Group has
recognized revenue from operations of Rs. 90,901 crore.
Our audit procedures included the following:
• Our audit procedures included considering the appropriateness
Revenue recognition has been recognized as a key audit matter due
to diverse and complex revenue streams across the Group.
of the Group’s revenue recognition accounting policies and
assessing compliance with the policies in terms of Ind AS 115.
We have identified following key areas for consideration:
• Performed walkthroughs and test of controls, assisted by IT
• Complexity associated with the calculation of profit petroleum in
the Oil & Gas segment.
• Complex calculation of power tariff agreements with Grid
Corporation of Odisha Limited (GRIDCO) and Punjab State Power
Corporation Limited (PSPCL).
• Cut-off: The variety of terms in the zinc, iron ore, copper,
aluminum and steel segments that define when control is
transferred to the customer, as well as the high value of the
transactions, give rise to the risk that revenue is not recognized in
the correct period.
•
•
specialists, of the revenue recognition processes and assessed the
design and operating effectiveness of key controls.
Inspected the terms of production sharing contracts in the Oil &
Gas segment and tested the underlying cost recovery and profit
petroleum calculations used by the management. Also, inspected
external legal opinions (where considered necessary) to evaluate
the merits of the claims made by the Company in computing
government’s share of revenue. We also assessed the adequacy
of disclosures made by the Group relating to calculation of profit
petroleum within the Oil & Gas segment.
Inspected the terms of the power purchase agreement to assess
the reasonability of the inputs used in the calculation of the
power tariff in respect of the revenue recognized for GRIDCO
and PSCPL. Other procedures relating to the revenue of the
Power division are mentioned in the recoverability of disputed
receivables section.
• Selected a sample of sales, in the zinc, steel, copper, iron ore and
aluminum segments, made pre and post year end, agreeing the
date of revenue recognition to third party support, such as bills
of lading, to confirm sales are recognized according to contract
conditions.
• Examined invoice samples with various shipping terms to ensure
that revenue has been recognized appropriately.
Recoverability of disputed receivables (as described in note 3c(B)(iii) and note 8 of the consolidated Ind AS financial statements)
As of March 31, 2019 the value of disputed receivables in the
power segment aggregated to ` 4,046 crore.
Our audit procedures included the following:
• Examined the underlying power purchase agreements.
Due to disagreements over the quantification or timing of the
receivables, the recovery of said receivables are subject to increased
risk. Some of these balances are also subject to litigation. The
risk is specifically related to receivables from Punjab State Power
Corporation Limited, GRIDCO and Tamil Nadu Electricity Board.
These receivables include long outstanding balances as well and
are also subject to counter party credit risk.
•
•
Inspected the relevant state regulatory commission, appellate
tribunal and court rulings.
Inspected external legal opinions in respect of the merits of the
case and critically assessed management’s position through
discussions with the management’s in-house legal team to
determine the basis of their conclusion.
• Examined management’s assessment of recoverability of
receivables.
• Assessed the adequacy of the disclosures made by the Group in
this regard.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 335
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
Key audit matters
How our audit addressed the key audit matter
Claims and exposures relating to taxation and litigation (as described in note 3c(B)(ii) and 37 of the consolidated Ind AS financial
statements)
The Group is subject to a large number of legal and tax related
claims which have been disclosed / provided for in the financial
statements based on the facts and circumstances of each case.
• Gained an understanding of the process of identification of
Our audit procedures included the following:-
Taxation and litigation exposures have been identified as a key audit
matter due to the complexities involved in these matters, timescales
involved for resolution and the potential financial impact of these
on the financial statements. Further, significant management
judgement is involved in assessing the exposure of each case and
thus a risk that such cases may not be adequately provided for
or disclosed.
claims, litigations and contingent liabilities and identified key
controls in the process. For selected controls we have performed
tests of controls.
• Obtained the summary of Group’s legal and tax cases and
critically assessed management’s position through discussions
with the Legal Counsel, Head of Tax and operational
management, on both the probability of success in significant
cases, and the magnitude of any potential loss.
•
Inspected external legal opinions (where considered necessary)
and other evidence to corroborate management’s assessment of
the risk profile in respect of legal claims.
• Engaged tax specialists to technically appraise the tax positions
taken by management with respect to local tax issues.
• Assessed whether management assessment of similar cases is
consistent across the divisions or that differences in positions are
adequately justified.
• Assessed the relevant disclosures made within the financial
statements to address whether they appropriately reflect the facts
and circumstances of the respective tax and legal exposures and
the requirements of relevant accounting standards.
Recoverability of unutilized Minimum Alternate Tax (MAT) credits included under deferred tax assets (as described in note 3c(A)(ix)
and 34 of the consolidated Ind AS financial statements)
Deferred tax assets as at March 31, 2019 includes MAT credits of
` 3,971 Crore relating to the Holding Company which is available for
utilization against future tax liabilities.
• Obtained and analysed the future projections estimated by
Our audit procedures included the following:-
The analysis of the recoverability of such deferred tax assets has
been identified as a key audit matter because the assessment
process involves judgement regarding the future profitability and
likelihood of the realization of these assets, in particular whether
there will be taxable profits in future periods that support the
recognition of these assets. This requires assumptions regarding
future profitability, which is inherently uncertain. Accordingly, the
same is considered as a key audit matter.
management, assessing the key assumptions used, including
the analysis of the consistency of the actual results obtained
by the various segments with those projected in the previous
year. We further obtained evidence of the approval of the
budgeted results included in the current year’s projections, and
the reasonableness of the future cash flow projections and the
consistency of those projections with those used in other areas
of estimation such as those used for assessing the recoverability
of assets.
Of the above MAT credits, we focused our effort on MAT assets of
` 1,161 Crore which are expected to be utilized during the last two
years of the stipulated fifteen year carry forward period from the
year in which, the same arose.
Purchase of economic interest in a structured investment from a related party (as described in note 38 of the consolidated Ind AS
financial statements)
The Group has as part of its cash management activities purchased
from its ultimate parent company the economic interests in a
structured investment.
through inspection of board and audit committee minutes,
underlying agreements and discussions with the management.
• Tested the completeness and accuracy of the MAT credits
• Obtained an understanding of the transaction and the key terms
recognized as deferred tax assets.
We considered this transaction to be a key audit matter as it was
unique and required involvement of third party experts to determine
the fair value of the instrument and an analysis of the relevant laws
and regulations governing related party transactions.
• Examined the reports of the third-party experts engaged by
the management to determine the fair value of the instrument.
Also evaluated the experience and competence of such experts.
• Engaged valuation specialists to assist us in auditing the said
valuation report.
• Held discussions with the management to assess compliance
with the relevant laws and regulations governing related party
transactions before undertaking the transaction. Also read the
external legal opinion obtained by the Company in this regard.
• Assessed the adequacy of the disclosures in the financial
statements regarding this transaction.
336
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS INFORMATION OTHER THAN THE FINANCIAL
STATEMENTS AND AUDITOR’S REPORT THEREON
The Holding Company’s Board of Directors is responsible
for the other information. The other information comprises
the information included in the Annual report, but does not
include the consolidated Ind AS financial statements and our
auditor’s report thereon.
Our opinion on the consolidated Ind AS financial statements
does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated Ind AS
financial statements, our responsibility is to read the other
information and, in doing so, consider whether such other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT FOR THE
CONSOLIDATED IND AS FINANCIAL STATEMENTS
The Holding Company’s Board of Directors is responsible
for the preparation and presentation of these consolidated
Ind AS financial statements in terms of the requirements
of 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 the 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. 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;
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 consolidated Ind AS financial statements
that give a true and fair view and are free from material
misstatement, 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.
In preparing the consolidated financial statements, the
respective Board of Directors of the companies included in
the Group and of its associates and jointly controlled entities
are responsible for assessing the ability of the Group and of its
associates and jointly controlled entities to continue as a going
concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Those respective Board of Directors of the companies
included in the Group and of its associates and jointly
controlled entities are also responsible for overseeing the
financial reporting process of the Group and of its associates
and jointly controlled entities.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the consolidated Ind AS financial statements as a
whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated Ind
AS financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the consolidated Ind AS financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our
opinion on whether the Holding Company has adequate
internal financial controls system in place and the operating
effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the ability of the Group and its
associates and jointly controlled entities to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated Ind AS
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group
and its associates and jointly controlled entities to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of
the consolidated Ind AS financial statements, including the
disclosures, and whether the consolidated Ind AS financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 337
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group and its associates and jointly controlled
entities of which we are the independent auditors and
whose financial information we have audited, to express an
opinion on the consolidated Ind AS financial statements.
We are responsible for the direction, supervision and
performance of the audit of the financial statements of such
entities included in the consolidated financial statements
of which we are the independent auditors. For the other
entities included in the consolidated financial statements,
which have been audited by other auditors, such other
auditors remain responsible for the direction, supervision
and performance of the audits carried out by them.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance of
the Holding Company and such other entities included in the
consolidated Ind AS financial statements of which we are the
independent auditors regarding, among other matters, the
planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated Ind AS financial
statements for the financial year ended March 31, 2019 and
are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should
not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
OTHER MATTER
(a) We did not audit the financial statements and other
financial information, in respect of 14 subsidiaries, whose Ind
AS financial statements include total assets of Rs 17,813 crore
as at March 31, 2019, and total revenues of Rs 7,066 crore
and net cash inflows of Rs 537 crore for the year ended on
that date. These Ind AS financial statement and other financial
information have been audited by other auditors, which
financial statements, other financial information and auditor’s
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 Rs. nil for the year ended
March 31, 2019, as considered in the consolidated Ind AS
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 associates, is based solely on the report(s) of
such other auditors.
338
Certain of these subsidiaries and associate are located
outside India whose financial statements and other financial
information have been prepared in accordance with
accounting principles generally accepted in the 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 and
associate 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 and associate 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.
(b) The accompanying consolidated Ind AS financial
statements include unaudited financial information in respect
of 3 subsidiaries, whose financial statements and other
financial information reflect total assets of Rs 2,899 crore
as at March 31, 2019, and total revenues of Rs.706 crore
and net cash outflows of Rs 119 crore for the year ended on
that date. The consolidated Ind AS financial statements also
include the Group’s share of net profit of Rs. Nil for the year
ended March 31, 2019, as considered in the consolidated
Ind AS financial statements, in respect of 1 associate and 3
jointly controlled entities, which financial statements, other
financial information have not been audited and whose
unaudited financial statements, other unaudited financial
information have been furnished to us by the management.
Our opinion, in so far as it relates 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. 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 matter’ paragraph we report, to
the extent applicable, that:
(a) We/the other auditors whose report 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 purposes of our audit of the aforesaid consolidated Ind
AS financial statements;
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL 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;
for the year ended March 31, 2019 has been paid / provided
by the Holding Company, its subsidiaries, associates and
jointly controlled entities incorporated in India to their directors
in accordance with the provisions of section 197 read with
Schedule V to the Act;
(c) The Consolidated Balance Sheet, the 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 Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from
the directors of the Holding Company as on March 31, 2019
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 subsidiary
companies, associate companies and jointly controlled
entities, none of the directors of the Group’s companies, its
associates and jointly controlled entities incorporated in India
is disqualified as on March 31, 2019 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 with reference to these consolidated Ind AS financial
statements 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;
(h) 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, as amended, 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
matter’ paragraph:
i. The consolidated Ind AS financial statements disclose the
impact of pending litigations on its consolidated financial
position of the Group, its associates and jointly controlled
entities in its consolidated Ind AS financial statements – Refer
Note 37 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, 2019;
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, 2019.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
(g) In our opinion and based on the consideration of reports
of other statutory auditors of the subsidiaries, associates and
jointly controlled entities in India, the managerial remuneration
Place: Mumbai
Date: May 07, 2019
per Raj Agrawal
Partner
Membership Number: 82028
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 339
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Independent Auditor’s Report continued
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”)
1. In conjunction with our audit of the consolidated Ind AS
financial statements of Vedanta Limited as of and for the
year ended March 31, 2019, 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 associate companies and jointly
controlled entities, which are companies incorporated in India,
as of that date.
MANAGEMENT’S RESPONSIBILITY FOR INTERNAL
FINANCIAL CONTROLS
2. The respective Board of Directors of the Holding Company,
its 12 subsidiary companies, its 1 associate company and 3
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 by them considering
the essential components of internal control stated in the
Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (“COSO 2013 criteria”) and
for one of its subsidiary company, which is also a company
incorporated in India, based on the internal control over
financial reporting criteria established by them 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. 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
3. Our responsibility is to express an opinion on the Holding
Company’s internal financial controls over financial reporting
with reference to these consolidated financial statements
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 with reference
to these consolidated Ind AS financial statements was
established and maintained and if such controls operated
effectively in all material respects.
4. Our audit involves performing procedures to obtain audit
evidence about the adequacy of the internal financial controls
over financial reporting with reference to these consolidated
Ind AS financial statements and their operating effectiveness.
Our audit of internal financial controls over financial reporting
340
included obtaining an understanding of internal financial
controls over financial reporting with reference to these
consolidated Ind AS financial statements, 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.
5. 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 over financial
reporting with reference to these consolidated Ind AS
financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER
FINANCIAL REPORTING WITH REFERENCE TO THESE
CONSOLIDATED IND AS FINANCIAL STATEMENTS
6. A company’s internal financial control over financial
reporting with reference to these consolidated Ind AS financial
statements 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
with reference to these consolidated financial statements
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 WITH
REFERENCE TO THESE CONSOLIDATED FINANCIAL
STATEMENTS
7. Because of the inherent limitations of internal financial
controls over financial reporting with reference to these
consolidated Ind AS financial statements, 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 with
reference to these consolidated Ind AS financial statements to
future periods are subject to the risk that the internal financial
control over financial reporting with reference to these
consolidated financial statements may become inadequate
because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS OPINION
8. In our opinion, the Holding Company, its subsidiary
companies, its associate company and jointly controlled
entities, which are companies incorporated in India, have,
maintained in all material respects, adequate internal financial
controls over financial reporting with reference to these
consolidated Ind AS financial statements and such internal
financial controls over financial reporting with reference to
these consolidated Ind AS financial statements were operating
effectively as at March 31,2019, based on the internal control
over financial reporting criteria established by the them
considering the essential components of internal control
stated in the COSO 2013 criteria and the Guidance Note as
described in paragraph 2 above .
OTHER MATTER
9. Our report under Section 143(3)(i) of the Act on the
adequacy and operating effectiveness of the internal financial
controls over financial reporting with reference to these
consolidated Ind AS financial statements of the Holding
Company, insofar as it relates to 1 subsidiary company, which
is incorporated in India, is based on the corresponding report
of the auditor of such subsidiary.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
Place: Mumbai
Date: May 07, 2019
per Raj Agrawal
Partner
Membership Number: 82028
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 341
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Consolidated Balance Sheet
as at March 31, 2019
Particulars
ASSETS
Non-current assets
Property, Plant and Equipment
Capital work-in-progress
Intangible assets
Exploration intangible assets under developments
Financial assets
Investments
Trade receivables
Loans
Others
Deferred tax assets (net)
Income tax assets (net)
Other non-current assets
Total non-current assets
Current assets
Inventories
Financial assets
Investments
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Derivatives
Others
Income tax assets (net)
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
Derivatives
Other financial liabilities
Provisions
Deferred tax liabilities (net)
Other non-current liabilities
Total non-current liabilities
Current liabilities
Financial liabilities
Borrowings
Trade payables
Derivatives
Other financial liabilities
Provisions
Income tax liabilities (net)
Other current liabilities
Total current liabilities
Total Equity and Liabilities
* Restated (Refer note 2(b))
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
342
Note
As at
March 31, 2019
As at
March 31, 2018*
(` in crore)
6
6
6
6
7A
8
9
10
34
34
11
12
7B
8
13
14
9
10
11
15
16
17
19
21
23
34
24
19
20
21
23
24
95,515
22,236
882
2,723
4,891
3,688
20
1,083
3,475
3,484
4,218
1,42,215
79,330
16,140
949
15,915
164
1,347
23
3,142
4,934
3,389
4,138
1,29,471
13,198
11,967
28,174
3,982
7,289
1,080
82
78
2,482
8
3,455
59,828
2,02,043
372
61,925
62,297
15,227
77,524
34,721
99
1,569
2,596
4,484
4,409
47,878
22,982
17,352
451
22,288
387
409
12,772
76,641
2,02,043
28,536
3,969
4,236
980
82
152
1,205
15
3,972
55,114
1,84,585
372
62,940
63,312
15,961
79,273
26,789
118
276
2,361
4,218
4,303
38,065
21,951
17,843
143
18,668
410
311
7,921
67,247
1,84,585
For and on behalf of Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Consolidated Statement of Profit and Loss
for the year ended March 31, 2019
Particulars
Revenue from operations (Net of excise duty)
Add: Excise duty
Revenue from operations (Gross of excise duty)
Other operating income
Other income
Total Income
EXPENSES
Cost of materials consumed
Purchases of stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock in trade
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
Profit before tax
Tax expense/(benefit) :
On other than exceptional items
Net current tax expense
Net deferred tax expense
Distribution tax credit 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 of jointly controlled entities and
associates and non-controlling interests
Add: Share in profit of jointly controlled entities and associates
Profit for the year after share in profit of jointly controlled entities and associates (A)
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurement (loss)/gain on defined benefit plans
Tax credit
(Loss)/Gain on FVOCI equity investment
Items that will be reclassified to profit or loss
Net gain/(loss) of cash flow hedges recognised during the year
Tax (expense)/ credit
Net (gain)/ loss on cash flow hedges recycled to profit or loss
Tax credit / (expense)
Net loss on FVOCI investments
Tax credit
Exchange differences on translation
Tax expense
Exchange difference and translation reclassified to profit or loss
Total other comprehensive income (B)
Total comprehensive income for the year (A+B)
Note
25A
25B
26
27
28
31
6
32
33
34
(` in Crore except otherwise stated)
Year ended
March 31, 2019
Year ended
March 31, 2018 *
90,901
-
90,901
1,147
4,018
96,066
90,954
1,057
92,011
912
3,205
96,128
25,490
31,582
588
72
18,144
3,023
-
5,689
8,192
21,628
82,826
13,240
320
13,560
2,677
1,073
-
-
112
3,862
9,698
0
9,698
(40)
25
(45)
(60)
113
(51)
(184)
60
(150)
17
737
(25)
-
517
457
220
450
14,026
2,496
1,057
5,112
6,283
18,230
79,456
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
(398)
158
353
(123)
(23)
2
625
(3)
1,485
2,076
2,176
10,155
15,868
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 343
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Consolidated Statement of Profit and Loss continued
for the year ended March 31, 2019
Particulars
Profit 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 per equity share after tax and exceptional items (`) :
- Basic
- Diluted
Earnings per equity share after tax but before exceptional items (`) :
- Basic
(` in Crore except otherwise stated)
Year ended
March 31, 2019
Year ended
March 31, 2018 *
Note
17
17
17
35
35
35
35
7,065
2,633
585
(128)
7,650
2,505
19.07
18.98
18.50
18.43
10,342
3,350
2,108
68
12,450
3,418
28.30
28.24
26.17
26.11
For and on behalf of Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
- Diluted
* Restated (Refer note 2(b))
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
344
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Consolidated Statement of Cash Flows
for the year ended March 31, 2019
Particulars
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Depreciation, depletion and amortisation
Impairment reversal (net)
Other exceptional items
Provision for doubtful debts/advances/ Bad debts written off
Exploration costs written off
Fair value gain on financial assets held for trading
Loss on sale/discard of property, plant and equipment (net)
Foreign exchange Loss (net)
Unwinding of discount
Other non-operating income
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 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 & cash equivalents acquired) (refer note 4)
Purchases of Property, Plant and Equipment (including intangibles)
Proceeds from sale of Property, Plant and Equipment
Proceeds from redemption of short-term deposits
Short-term deposits made
Proceeds from sale of short term investments
Short-term investments made
Purchase of other investment (refer note 38)
Interest received
Dividends received
Payments made to site restoration fund
Net cash (used in) / from investing activities
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018*
13,560
19,569
8,220
(261)
(59)
-
50
6,310
(4,327)
1,598
68
-
(1,988)
(1,676)
68
512
93
-
81
(1,447)
5,593
(183)
(1,755)
(418)
(935)
932
4,304
26,367
(2,613)
23,754
(5,075)
(8,942)
125
4,406
(1,926)
83,362
(81,523)
(1,816)
884
30
(55)
15
82
84
22
47
(1,304)
4,996
(145)
(1,685)
(2,215)
(1,633)
101
657
20,564
(3,198)
17,366
(859)
(7,334)
38
6,230
(3,774)
1,02,592
(82,841)
-
1,405
10
(71)
(10,530)
15,396
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 345
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Consolidated Statement of Cash Flows continued
for the year ended March 31, 2019
Particulars
CASH FLOWS FROM FINANCING ACTIVITIES
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
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 increase/(decrease) 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))
Notes:
1. The figures in brackets indicate outflows.
2. The cash flow statement has been prepared using the indIrect method as set out in Ind AS 7.
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018*
(626)
4,429
(3,179)
16,835
(9,760)
(6,009)
(8,076)
(3,716)
(144)
4
(3,945)
4,238
(9,291)
8,271
(16,542)
(5,006)
(14,881)
(1,931)
(202)
34
(10,242)
(39,255)
(64)
2,918
4,467
7,385
84
(6,409)
10,876
4,467
* Restated (Refer note 2(b))
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
For and on behalf of Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
346
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
for the year ended March 31, 2019
A. EQUITY SHARE CAPITAL
Equity shares of `1/- each issued, subscribed and fully paid up
As at March 31, 2019 and March 31, 2018
B. OTHER EQUITY
Number of shares
(` in crore)
372
Amount
(` in crore)
372
(` in Crore)
Particulars
Reserves and surplus
Items of OCI
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
Balance as at April 01, 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(b))
(69)
Recognition of put option liability/
derecognition of non controlling
interest
Dividend, including tax on dividend
(Refer note 36)
14
-
-
-
-
-
-
-
-
-
-
-
-
-
10,342
8
10,350
-
(22)
-
3
10
-
-
-
-
2,038
2,038
(202)
22
47
(3)
24
292
(292)
-
-
(9,462)
-
-
-
-
-
-
-
-
-
-
-
Balance as at March 31, 2018 *
18,964
19,009
2,887
20,635
1,220
Profit for the year
Other comprehensive income for the
year (net of tax impact)
Total comprehensive income for
the year
Purchase of treasury shares
Recognition of share based payment
Stock options cancelled during the
year
Exercise of stock option
Transfer from debenture redemption
reserve (net)
Recognition of put option liability/
derecognition of non controlling
interest
Acquisition of ESL (refer note 4(a))
Dividend, including tax on dividend
(Refer note 36)
-
-
-
-
-
-
-
-
(196)
-
-
-
-
-
-
-
-
-
-
-
-
-
7,065
(12)
7,053
-
-
7
1
-
-
-
(144)
82
(7)
3
174
(174)
-
-
(8,411)
-
-
-
-
791
791
-
-
-
-
-
-
-
-
59
-
90
90
-
-
-
-
-
-
-
-
-
149
-
(45)
(45)
-
-
-
-
-
-
-
-
Balance as at March 31, 2019
18,768
19,009
1,711
20,395
2,011
104
99
-
5 60,128
13,928
74,056
- 10,342
3,350
13,692
(13)
(15)
2,108
68
2,176
(13)
(15) 12,450
3,418
15,868
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(202)
-
47
-
34
-
(69)
-
-
-
-
-
-
109
(202)
-
47
-
34
-
40
14
(66)
(52)
-
(9,462)
(1,428)
(10,890)
86
-
(10) 62,940
15,961
78,901
-
7,065
2,633
9,698
(86)
(63)
585
(128)
457
(86)
(63)
7,650
2,505
10,155
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(144)
82
-
4
-
-
-
-
-
-
(144)
82
-
4
-
(196)
-
139
196
(57)
196
-
(8,411)
(3,574)
(11,985)
(73) 61,925
15,227
77,152
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 347
MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Consolidated Statement of Changes in Equity continued
for the year ended March 31, 2019
Note:
Other reserves comprise of:
Particulars
Balance as at April 01, 2017
Purchase of treasury shares
Creation of legal reserve
Recognition of share based payment
Stock options cancelled during the year
Exercise of stock options
Transfer from retained earnings
Balance as at March 31, 2018
Purchase of treasury shares
Recognition of share based payment
Stock options cancelled during the year
Exercise of stock option
Redemption of preference shares (refer
note 16(e))
Transfer to retained earnings
Capital
redemption
reserve
Debenture
redemption
reserve
Preference
share
redemption
reserve
Capital
reserve on
consolidation
Share based
payment
reserve
23
1,769
77
10
155
-
-
-
-
-
-
-
-
-
-
-
(292)
-
-
-
-
-
-
-
-
-
-
-
-
23
1,477
77
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,010
(174)
-
-
-
-
-
-
-
-
-
47
(3)
(22)
-
177
-
82
(7)
(3)
-
-
Legal
reserve
Treasury
shares
General
reserve
Total
3
-
22
-
-
-
-
25
-
-
-
-
-
-
(103)
(202)
-
-
-
46
-
(259)
(144)
-
-
6
-
-
19,105
21,039
-
-
-
-
-
-
(202)
22
47
(3)
24
(292)
19,105
20,635
-
-
-
-
(3,010)
(144)
82
(7)
3
-
-
(174)
Balance as at March 31, 2019
23
1,303
3,087
10
249
25
(397)
16,095
20,395
* Restated (Refer note 2(b))
See accompanying notes to the financial statements
As per our report of even date
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Mumbai
Date: May 07, 2019
For and on behalf of Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
348
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 1. GROUP OVERVIEW
Vedanta Limited (“the Company”) and its consolidated
subsidiaries (collectively, the “Group”) is a diversified natural
resource group engaged in exploring, extracting and
processing minerals and oil and gas. The Group engages in the
exploration, production and sale of zinc, lead, silver, copper,
aluminium, iron ore and oil and gas and have a presence
across India, South Africa, Namibia, Ireland, Australia, Liberia
and UAE. The Group is also in the business of commercial
power generation, steel manufacturing and port operations
in India and manufacturing of glass substrate in South
Korea and Taiwan.
The Company was incorporated on September 8, 1975
under the laws of the Republic of India. The registered office
of the Company is situated at 1st Floor, ‘C’ wing, Unit 103,
Corporate Avenue, Atul Projects, Chakala, Andheri (East),
Mumbai-400092, Maharashtra. the Company’s shares
are listed on National Stock Exchange and Bombay Stock
Exchange in India. In June 2007, the Company completed its
initial public offering of American Depositary Shares, or ADS,
each representing four equity shares, and listed its ADSs on
the New York Stock Exchange. In July 2009, Vedanta Limited
completed its follow-on offering of an additional 131,906,011
ADSs, each representing four equity shares, which are listed on
the New York Stock Exchange.
The Company is majority owned by Twin Star Holdings
Limited (“Twin Star”), Finsider International Company Limited
(“Finsider”), West Globe Limited (“West Globe”) and Welter
Trading Limited (“Welter”) which are in turn wholly-owned
subsidiaries of Vedanta Resources PLC (“VRPLC”), which was
a public limited company incorporated in the United Kingdom
and listed on the London Stock Exchange (VRPLC has been
delisted from London Stock Exchange on October 1, 2018
and is renamed as “Vedanta Resources Limited” (“VRL”) with
effect from October 29, 2018). Twin Star, Finsider, West Globe
and Welter held 37.1%, 10.8%, 1.2% and 1.0% respectively of
the Company’s equity as at March 31, 2019.
Details of Group’s various businesses are as follows.
The Group’s percentage holdings in each of the below
businesses are disclosed in note 40.
order, operations in the state of Goa are currently suspended.
The Group’s iron ore business includes Western Cluster Limited
(“WCL”) in Liberia which has iron ore assets and is wholly
owned by the Group. WCL’s assets include development rights
to Western Cluster and a network of iron ore deposits in West
Africa. WCL’s assets have been fully impaired.
• The Group’s copper business is owned and operated by the
Company, Copper Mines of Tasmania Pty Ltd (“CMT”) and
Fujairah Gold FZC and is principally one of custom smelting
and includes captive power plants at Tuticorin in Southern
India.
The Group’s copper business in Tamil Nadu, India has
received an order from the Tamil Nadu Pollution Control
Board (“TNPCB”) on April 09, 2018, rejecting the Company’s
application for renewal of consent to operate under the Air
and Water Acts for the 400,000 tpa copper smelter plant in
Tuticorin for want of further clarification and consequently
the operations were suspended. The Company has filed an
appeal with TNPCB Appellate authority against the said order.
During the pendency of the appeal, TNPCB through its order
dated May 23, 2018 ordered for disconnection of electricity
supply and closure of copper smelter plant. Post such
order, the State government on May 28, 2018 ordered the
permanent closure of the plant [Refer note 3(c)(A)(x)].
In addition, the Group owns and operates the Mt.
Lyell copper mine in Tasmania, Australia through its
subsidiary, CMT and a precious metal refinery and copper
rod plant in Fujairah, UAE through its subsidiary Fujairah
Gold FZC. The operations of Mt Lyell copper mine were
suspended in January 2014 following a mud slide incident
and were put into care and maintenance since July 09, 2014
following a rock fall incident in June 2014.
• The Group’s Aluminium business is owned and operated by
the Company and by Bharat Aluminium Company Limited
(“BALCO”). The aluminium operations include a refinery and
captive power plant at Lanjigarh and a smelter and captive
power plants at Jharsuguda both situated in the State of
Odisha in India. BALCO’s partially integrated aluminium
operations are comprised of two bauxite mines, captive
power plants, smelting and fabrication facilities in the state of
Chattisgarh, in central India.
• Zinc India business is owned and operated by Hindustan
• The Group’s power business is owned and operated by
Zinc Limited (“HZL”).
• Zinc international business is comprised of Skorpion mine
and refinery in Namibia operated through THL Zinc Namibia
Holdings (Proprietary) Limited (“Skorpion”), Lisheen mine
in Ireland operated through Vedanta Lisheen Holdings
Limited (“Lisheen”) (Lisheen mine ceased operations in
December 2015) and Black Mountain Mining (Proprietary)
Limited (“BMM”), whose assets include the operational Black
Mountain mine and the Gamsberg mine project located in
South Africa.
• The Group’s oil and gas business is owned and operated by
the Company (prior to merger this was owned and operated
by erstwhile Cairn India Limited) and its subsidiary, Cairn
Energy Hydrocarbons Limited and consists of exploration
and development and production of oil and gas.
• The Group’s iron ore business is owned by the Company,
and by two wholly owned subsidiaries of the Company i.e.
Sesa Resources Limited and Sesa Mining Corporation Limited
and consists of exploration, mining and processing of iron ore,
pig iron and metallurgical coke and generation of power for
captive use. Pursuant to Honourable Supreme Court of India
the Company, BALCO, and Talwandi Sabo Power Limited
(“TSPL”), a wholly owned subsidiary of the Company, which
are engaged in the power generation business in India.
The Company’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 included 600 MW (2 units of 300 MW each)
thermal coal based power plant at Korba, of which a
unit of 300 MW was converted to be used for captive
consumption vide order from Central Electricity Regulatory
Commission (CERC) dated January 1, 2019. Talwandi Sabo
Power Limited (“TSPL”) power operations include 1,980
MW (three units of 660 MW each) thermal coal- based
commercial power facilities. Power business also includes
the wind power plants commissioned by HZL and a power
plant at MALCO Energy Limited (“MEL”) (under care and
maintenance) situated at Mettur Dam in the State of Tamil
Nadu in southern India.
• The Group’s other activities include Electrosteel Steels
Limited (“ESL”) acquired on June 4, 2018. ESL is engaged in
the manufacturing and supply of billets, TMT bars, wire rods
and ductile iron pipes in India.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 349
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The Group’s other activities also include Vizag General
Cargo Berth Private Limited (“VGCB”) and Maritime Ventures
Private Limited (“MVPL”). Vizag port project includes
mechanization of coal handling facilities and upgradation
of general cargo berth for handling coal at the outer
harbour of Visakhapatnam Port on the east coast of India.
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.
VGCB commenced operations in the fourth quarter of fiscal
2013. The Group’s other activities also include AvanStrate
Inc. (“ASI”). ASI is involved in the manufacturing of glass
substrate in South Korea and Taiwan.
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) and
Guidance Note on Accounting for Oil and Gas Producing
Activities (Ind AS) issued by the Institute of Chartered
Accountants of India.
These financial statements have been prepared in
accordance with the accounting policies, set out below and
were consistently applied to all periods presented unless
otherwise stated.
These financial statements are approved for issue by the Board
of Directors on May 07, 2019.
Certain comparative figures appearing in these consolidated
financial statements have been regrouped and/or reclassified
to better reflect the nature of those items.
All financial information presented in Indian Rupees has been
rounded off to the nearest crore. Amounts less than ` 0.50
Crore have been presented as “0”.
(B) Reclassification/ Restatement
(i) The Group has revised the presentation of forward premium
relating to derivative instruments to present it along with the
mark-to-market gain/loss on these instruments, as these more
appropriately reflect the substance of the forward premiums
on derivative transactions. As a result of the change, forward
premium expense amounting to ` 671 Crore (for the year
ended March 31, 2019: ` 341 Crore) has been reclassified
from ‘Finance cost’ to ‘other income/ other expenses’ for
the comparative year ended March 31, 2018. Similarly, net
cash flows from operating activities in the consolidated
statement of cash flows has reduced by an equivalent
amount with corresponding effect on the net cash used in
financing activities.
(ii) The classification of export incentives from government has
also been revised to present it under ‘other operating income’,
as the revised classification is more appropriate. As a result of
the change, export incentives amounting to ` 418 Crore has
been reclassified from ‘revenue’ to ‘other operating income’ for
the comparative year ended March 31, 2018. Similarly, scrap
sales and miscellaneous income amounting to ` 177 Crore
and ` 217 Crore respectively have also been reclassified from
‘revenue’ to ‘other operating income’ for the comparative year
ended March 31, 2018.
350
(iii) In the comparative period, the Group acquired equity stake
in AvanStrate Inc. (ASI). As permitted by Ind AS 103, the Group
had used provisional fair values that were determined as at
March 31, 2018 for consolidation. In the current year, these fair
values were finalised. Hence, the comparative year amounts
have been restated accordingly. Please refer note 4(b) for
further details.
None of the above had any effect on the equity as at
April 01, 2017.
(C) 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.
3(a) SIGNIFICANT ACCOUNTING POLICIES
(A) Basis of Consolidation
i) Subsidiaries:
The consolidated financial statements incorporate the results
of the Company and all its subsidiaries (the “Group”), being the
entities that it controls. Control is evidenced where the Group
has power over the investee, is exposed, or has rights, to
variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Power is demonstrated through existing rights that
give the ability to direct relevant activities, which significantly
affect the entity’s returns.
The financial statements of subsidiaries are prepared for the
same reporting year as the 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. Similarly, upon
dilution of controlling interests the difference between the cash
received from sale or listing of the subsidiary shares and the
increase to non-controlling interest is also recognised in equity.
The results of subsidiaries acquired or disposed off during the
year are included in the consolidated 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.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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.
It participates in several unincorporated joint operations
which involve the joint control of assets used in oil and gas
exploration and producing activities. The Group accounts
for its share of assets, liabilities, income and expenditure
of joint operations in which the Group holds an interest.
Liabilities in unincorporated joint operations, where the Group
is the operator, is accounted for at gross values (including
share of other partners) with a corresponding receivable
from the venture partners. These have been included in the
consolidated financial statements under the appropriate
headings. Details of joint operations are set out in note 38.
Joint venture
The Group accounts for its interest in joint venture using the
equity method (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
An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee, but is not control or joint control over those
policies. Investments in associates are accounted for using
the equity method (see (iv) below). 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, 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.
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 recognised.
Losses recognised under the equity method in excess of the
Group’s investment in ordinary shares are applied to the other
components of the Group’s interest that forms part of Group’s
net investment in the investee in the reverse order of their
seniority (i.e. priority in liquidation).
If the Group’s share of losses in an associate or 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 arising from transactions with associates
and joint ventures are eliminated against the investment
to the extent of the Group’s interest in these entities.
Unrealised losses are eliminated in the same way as unrealized
gains, but only to the extent that there is no evidence of
impairment of the asset transferred. Accounting policies of
equity accounted investees is changed where necessary to
ensure consistency with the policies adopted by the Group.
The carrying amount of equity accounted investments are
tested for impairment in accordance with the policy described
in note below 3(a)(I).
(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
under Ind AS 103 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 Group 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.
Those provisional amounts are adjusted through goodwill
during the measurement period, or additional assets or
liabilities are recognised, to reflect new information obtained
about facts and circumstances that existed at the acquisition
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 351
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recognised at that date. These adjustments are called as
measurement period adjustments. The measurement period
does not exceed twelve months from the acquisition date.
Any non-controlling interest in an acquiree is measured at fair
value or at the non-controlling interest’s proportionate share of
the acquiree’s net identifiable assets. This accounting choice is
made on a transaction by transaction basis.
Acquisition expenses are charged to the consolidated
statement of profit and loss.
If the Group acquires a group of assets in a company that
does not constitute a business 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
• Sale of goods/rendering of services (Revenue from
contracts with customers)
The Group’s revenue from contracts with customers is
mainly from the sale of copper, aluminium, iron ore, zinc, oil
and gas, power, steel, glass substrate and port operations.
Revenue from contracts with customers is recognised
when control of the goods or services is transferred to the
customer which usually is on delivery of the goods to the
shipping agent at an amount that reflects the consideration
to which the Group expects to be entitled in exchange
for those goods or services. Revenue is recognised net of
discounts, volume rebates, outgoing sales taxes/ goods and
service tax and other indirect taxes excluding excise duty.
Revenues from sale of by-products are included in revenue.
352
Certain of the Group’s sales contracts provide for provisional
pricing based on the price on the London Metal Exchange
(LME) and crude index, as specified in the contract.
Revenue in respect of such contracts is recognised when
control passes to the customer and is measured at the
amount the entity expects to be entitled – being the
estimate of the price expected to be received at the end of
the measurement period. Post transfer of control of goods,
provisional pricing features are accounted in accordance
with 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 are included in total revenue from operations on
the face of the consolidated statement of profit and loss
and disclosed by way of note to the financial statements.
Final settlement of the price is based on the applicable
price for a specified future period. The Group’s provisionally
priced sales are marked to market using the relevant forward
prices for the future period specified in the contract and is
adjusted in revenue.
Revenue from oil, gas and condensate sales represent
the Group’s share of oil, gas and condensate production,
recognised on a direct entitlement basis, when control is
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
at after reducing government’s share of profit petroleum
which is accounted for when the obligation in respect of
the same arises.
Revenue from sale of power is recognised when delivered
and measured based on rates as per bilateral contractual
agreements with buyers and at a rate arrived at based on
the principles laid down under the relevant Tariff Regulations
as notified by the regulatory bodies, as applicable.
Where the Group acts as a port operator, revenues relating
to operating and maintenance phase of the port contract
are measured at the amount that Group expects to be
entitled to for the services provided.
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Group performs part of its obligation by transferring
goods or services to a customer before the customer pays
consideration or before payment is due, a contract asset is
recognised for the earned consideration when that right is
conditional on the Group’s future performance.
A contract liability is the obligation to transfer goods or
services to a customer for which the Group has received
consideration from the customer. If a customer pays
consideration before the Group transfers goods or services
to the customer, a contract liability is recognised when the
payment is received. Contract liabilities are recognised as
revenue when the Group performs under the contract.
The Group does not expect to have any contracts where
the period between the transfer of the promised goods or
services to the customer and payment by the customer
exceeds one year. As a consequence, the Group does
not adjust any of the transaction prices for the time
value of money.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS • 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.
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. Costs incurred prior to obtaining the legal
rights to explore an area are expensed immediately to the
consolidated statement of profit and loss.
• 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
When a decision is taken that a mining property is viable for
commercial production (i.e. when the Group determines that
the mining property will provide sufficient and sustainable
return relative to the risks and the Group decided to proceed
with the mine development), all further pre-production primary
development expenditure other than that on land, buildings,
plant, equipment and capital work in progress is capitalized
as property, plant and equipment under the heading “Mining
properties and leases” together with any amount transferred
from “Exploration and evaluation” assets. The costs of mining
properties and leases include the costs of acquiring and
developing mining properties and mineral rights.
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 Group
uses the expected volume of waste compared with the actual
volume of waste extracted for a given value of ore/ mineral
production for the purpose of determining the cost of the
stripping activity asset.
Deferred stripping costs are included in mining properties
within property, plant and equipment and disclosed as a part
of mining properties. After initial recognition, the stripping
activity asset is depreciated on a unit of production method
over the expected useful life of the identified component
of the ore body.
In circumstances where a mining property is abandoned,
the cumulative capitalised costs relating to the property are
written off in the period in which it occurs i.e. when the Group
determines that the mining property will not provide sufficient
and sustainable returns relative to the risks and the Group
decides not to proceed with the mine development.
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. Major inspection and overhaul
expenditure is capitalized, if the recognition criteria are met
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 associated
with the commissioning of an asset and any obligations for
decommissioning costs are capitalised until the period of
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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 or amortised.
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
statement of profit and loss if the next overhaul is
undertaken earlier than the previously estimated life of the
economic benefit.
• 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
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.
• 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) as given below.
Management’s assessment takes into account, inter alia,
the nature of the assets, the estimated usage of the assets,
the operating conditions of the assets, past history of
replacement and maintenance support.
Estimated useful life of assets are as follows:
Asset
Buildings (Residential; factory etc.)
Plant and equipment
Railway siding
Office equipment
Furniture and fixture
Vehicles
354
Useful life
(in years)
3-60
15-40
15
3-6
8-10
8-10
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.
The Group has reassessed the economic lives of commercial
thermal power plants to be the lower of its technical useful
life or the term of the power purchase agreement, which is
25 years. This has had no material impact on these financial
statements.
(E) Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Subsequently, intangible assets
are measured at cost less accumulated amortisation and
accumulated impairment losses, if any.
The Group recognises port concession rights as “Intangible
Assets” arising from a service concession arrangements, in
which the grantor controls or regulates the services provided
and the prices charged, and also controls any significant
residual interest in the infrastructure such as property, plant
and equipment, irrespective whether the infrastructure is
existing infrastructure of the grantor or the infrastructure
is constructed or purchased by the Group as part of the
service concession arrangement. Such an intangible asset is
recognised by the Group initially at cost determined as the
fair value of the consideration received or receivable for the
construction service delivered and is capitalised when the
project is complete in all respects. Port concession rights are
amortised on straight line basis over the balance of license
period. The concession period is 30 years from the date
of the award. Any addition to the port concession rights
are measured at fair value on recognition. Port concession
rights also include certain property, plant and equipment
in accordance with Appendix C of Ind AS 115 “service
concession arrangements”.
Intangible assets are amortised over their estimated useful
life on a straight line basis. Software is amortised over the
estimated useful life ranging from 0-5 years. Amounts paid
for securing mining rights are amortised over the period of
the mining lease ranging from 16-25 years. Technological
know-how and acquired brand are amortised over the
estimated useful life of ten years.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the consolidated statement of profit and loss
when the asset is derecognised.
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.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
(F) 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. Drilling costs are
written off on completion of a well unless the results indicate
that hydrocarbon reserves exist and there is a reasonable
prospect that these reserves are commercial.
Following appraisal of successful exploration wells, if
commercial reserves are established and technical feasibility
for extraction demonstrated, then the related capitalised
exploration costs are transferred into a single field cost
centre within property, plant 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.
(G) 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.
(H) 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. Internal and external factors, such as worse economic
performance than expected, changes in expected future
prices, costs and other market factors are also monitored to
assess for indications of impairment or reversal of previously
recognised impairment losses.
If any such indication exists or in case of goodwill where
annual testing of impairment is required, then an impairment
review is undertaken 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 Group and not applicable to
entities in general. Fair value for mineral and oil and gas assets
is generally determined as the present value of the estimated
future cash flows expected to arise from the continued use of
the asset, including any expansion prospects, and its eventual
disposal, using assumptions that an independent market
participant may take into account. These cash flows are
discounted at an appropriate post tax discount rate to arrive at
the net present value.
Value in use is determined as the present value of the estimated
future cash flows expected to arise from the continued use of
the asset in its present form and its eventual disposal. The cash
flows are discounted using a pre-tax discount rate that reflects
current market assessments of the time value of money and
the risks specific to the asset for which estimates of future
cash flows have not been adjusted. Value in use is determined
by applying assumptions specific to the Group’s continued
use and cannot take into account future development.
These assumptions are different to those used in calculating fair
value and consequently the value in use calculation is likely to
give a different result to a fair value calculation.
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The carrying amount of the CGU is determined on a basis
consistent with the way the recoverable amount of the CGU
is determined. The carrying value is net of deferred tax liability
recognised in the fair value of assets acquired in the business
combination.
If the recoverable amount of an asset or CGU is estimated
to be less than 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 except if initially attributed to goodwill.
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 indicators:
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) he 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.
• the period for which the Group has the right to explore in
• Debt instruments at fair value through other
the specific area has expired during the period or will expire
in the near future, and is not expected to be renewed;
comprehensive income (FVOCI)
A ‘debt instrument’ is classified as at FVOCI if both of the
• substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned;
• exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially
viable quantities of mineral resources and the Group has
decided to discontinue such activities in the specific area;
• sufficient data exist to indicate that, although a development in
the specific area is likely to proceed, the carrying amount of the
exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale; and
• reserve information prepared annually by external experts
When a potential impairment is identified, an assessment is
performed for each area of interest in conjunction with the
group of operating assets (representing a cash-generating unit)
to which the exploration and evaluation assets is attributed.
Exploration areas in which reserves have been discovered but
require major capital expenditure before production can begin,
are continually evaluated to ensure that commercial quantities
of reserves exist or to ensure that additional exploration work is
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.
(I) 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 & subsequent measurement
All financial assets are recognised initially at fair value plus, in
the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the
acquisition of the financial asset. Purchases or sales of financial
assets that require delivery of assets within a time frame
established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the
date that the Group commits to purchase or sell the asset.
356
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, interest income,
impairment losses and reversals and foreign exchange gain
or loss are recognized in the consolidated statement of 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.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
• Equity instruments
All equity investments in the 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 Group may make an irrevocable
election to present in other comprehensive income
subsequent changes in the fair value. The Group makes
such election on an instrument-by-instrument basis.
The classification is made on initial recognition and is
irrevocable.
If the Group decides to classify an equity instrument as
at FVOCI, then all fair value changes on the instrument,
excluding dividends, are 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 115.
The Group follows ‘simplified approach’ for recognition of
impairment loss allowance on trade receivables, contract
assets and lease receivables. The application of simplified
approach does not require the Group to track changes in
credit risk. Rather, it recognises impairment loss allowance
based on lifetime ECLs at each reporting date, right from its
initial recognition.
At each reporting date, for recognition of impairment loss on
other financial assets and risk exposure, the Group determines
whether there has been a significant increase in the credit
risk since initial recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide for impairment
loss. However, if credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit quality of the
instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the Group
reverts to recognising impairment loss allowance based on
12-month ECL.
Lifetime ECL are the expected credit losses resulting from all
possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL
which results from default events that are possible within 12
months after the reporting date.
ECL is the difference between all contractual cash flows that
are due to the Group in accordance with the contract and all
the cash flows that the entity expects to receive, discounted at
the original EIR.
ECL impairment loss allowance (or reversal) during the year
is 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 Group
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 financial liabilities at amortised cost, net of directly
attributable transaction costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts and derivative
financial instruments.
The measurement of financial liabilities depends on their
classification, as described below:
• Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of 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
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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 profit or loss.
• Financial liabilities at amortised cost (Loans and
Borrowings and Trade and Other payables)
After initial recognition, interest-bearing loans and
borrowings and trade and other payables are subsequently
measured at amortised cost using the EIR method.
Gains and losses are recognised in 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.
(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
consolidated 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.
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
358
are accounted for as separate derivatives and recorded at fair
value if their economic characteristics and risks are not closely
related to those of the host contracts and the host contracts
are not held for trading or designated at fair value though
profit or loss. These embedded derivatives are measured at
fair value with changes in fair value recognised in consolidated
statement of profit or 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 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.
(viii) 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.
(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 Group enters into
forward, option, swap contracts and other derivative financial
instruments. The Group does not hold derivative financial
instruments for speculative purposes.
Such derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract
is entered into and are subsequently re-measured at fair
value. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair
value is negative.
Any gains or losses arising from changes in the fair value of
derivatives are taken directly to consolidated statement of
profit and 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,
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
the nature of the risk being hedged, hedge ratio and how
the Group will assess the effectiveness of changes in the
hedging instrument’s fair value in offsetting the exposure
to changes in the hedged item’s fair value or cash flows
attributable to the hedged risk. Such hedges are expected
to be highly effective in achieving offsetting changes in fair
value or cash flows and are assessed on an ongoing basis
to determine that they actually have been highly effective
throughout the financial reporting periods for which they were
designated.
Hedges that meet the strict criteria for hedge accounting are
accounted for, as described below:
(i) Fair value hedges
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recognised in consolidated
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 consolidated statement of
profit and loss. Hedge accounting is discontinued when
the Group revokes the hedge relationship, the hedging
instrument or hedged item expires or is sold, terminated,
or exercised or no longer meets the criteria for hedge
accounting.
(ii) Cash flow hedges
The effective portion of the gain or loss on the hedging
instrument is recognised in OCI in the cash flow hedge
reserve, while any ineffective portion is recognised
immediately in the consolidated statement of profit and loss.
Amounts recognised in OCI are transferred to consolidated
statement of profit and 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 in 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.
(iii) Hedges of a net investment
Hedges of a net investment in a foreign operation, including a
hedge of a monetary item that is accounted for as part of the
net investment, are accounted for in a way similar to cash flow
hedges. Gains or losses on the hedging instrument relating
to the effective portion of the hedge are recognised in OCI
while any gains or losses relating to the ineffective portion are
recognised in the consolidated 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).
(J) 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.
(K) 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 consolidated 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 policy on
general 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 consolidated 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.
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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 Group’s net
investment in the leases. Finance lease income is allocated
to accounting periods so as to reflect a constant periodic
rate of return on the net investment outstanding in respect of
the lease.
(L) Inventories
Inventories and work-in-progress are stated at the lower
of cost and net realisable value. Cost is determined on the
following basis:
• Purchased copper concentrate is recorded at cost on a
first-in, first-out (“FIFO”) basis; all other materials including
stores and spares are valued on weighted average basis
except in Oil and Gas business where stores and spares are
valued on FIFO basis.
• Finished products are valued at raw material cost plus costs
of conversion, comprising labour costs and an attributable
proportion of manufacturing overheads based on normal
levels of activity and are moved out of inventory on a
weighted average basis (except in copper business where
FIFO basis is followed) and
• By-products and scrap are valued at net realisable value.
Net realisable value is determined based on estimated
selling price, less further costs expected to be incurred for
completion and disposal.
(M) Government grants
Grants and subsidies from the government are recognised
when there is reasonable assurance that (i) the Group will
comply with the conditions attached to them, and (ii) the
grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognised
as income on a systematic basis in the consolidated 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.
360
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.
(N) Taxation
Tax expense represents the sum of current tax and
deferred tax.
Current tax is provided at amounts expected to be paid
(or recovered) using the tax rates and laws that have been
enacted or substantively enacted by the reporting date
and includes any adjustment to tax payable in respect of
previous years.
Subject to the exceptions below, deferred tax is provided,
using the balance sheet method, on all temporary differences
at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes and on carry forward of unused tax credits and
unused tax losses:
• tax payable on the future remittance of the past earnings
of subsidiaries where the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future;
• deferred income tax is not recognised on initial recognition
as well as on the impairment of goodwill which is not
deductible for tax purposes or on the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit (tax loss); and
• deferred tax assets (including MAT credit entitlement) are
recognised only to the extent that it is more likely than not
that they will be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset
is 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
consolidated statement of profit and loss is recognised outside
consolidated 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 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.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Subsequently deferred tax is charged or credited in the
profit or loss/other comprehensive income as the underlying
temporary difference is reversed.
(O) Retirement benefit schemes
The Group operates or participates in a number of defined
benefits and defined contribution schemes, the assets of
which (where funded) are held in separately administered
funds. For defined benefit schemes, the cost of providing
benefits under the plans is determined by actuarial valuation
each year separately for each plan using the projected unit
credit method by third party qualified actuaries.
Remeasurement including, effects of asset ceiling and
return on plan assets (excluding amounts included in
interest on the net defined benefit liability) and actuarial
gains and losses arising in the year are recognised in full in
other comprehensive income and are not recycled to the
consolidated statement of profit and loss.
Past service costs are recognised in consolidated statement of
profit and 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 are
recognised within employee benefit expense. 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.
(P) 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.
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, VRL offered certain share-based incentives under the
Long-Term Incentive Plan (“LTIP”) to employees and directors of
the Company and its subsidiaries. VRL 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.
(Q) Provisions, contingent liabilities and contingent assets
The assessments undertaken in recognising provisions and
contingencies have been made in accordance with the
applicable Ind AS.
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 balance sheet.
In the normal course of business, contingent liabilities may
arise from litigation and other claims against the Group.
Financial guarantees are also provided in the normal course
of business. There are certain obligations which management
has concluded, based on all available facts and circumstances,
are not probable of payment or are very difficult to quantify
reliably, and such obligations are treated as Contingent
liabilities and disclosed in the notes but are not reflected
as liabilities in the financial statements. Although there can
be no assurance regarding the final outcome of the legal
proceedings in which the Group is involved, it is not expected
that such contingencies will have a material effect on its
financial position or profitability.
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
Contingent assets are not recognised but disclosed in
the financial statements when an inflow of economic
benefit is probable.
The Group has significant capital commitments in relation
to various capital projects which are not recognized on the
balance sheet.
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(R) 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.
(S) Accounting for foreign currency transactions and
translations
The functional currency for each entity in the Group is
determined as the currency of the primary economic
environment in which it operates. For all principal operating
subsidiaries, the functional currency is normally the local
currency of the country in which it operates with the exception
of oil and gas business operations which have a US dollar
functional currency as that is the currency of the primary
economic environment in which it operates. The financial
statements are presented in Indian rupee (`).
In the financial statements of individual group companies,
transactions in currencies other than the respective
functional currencies are translated into their functional
currencies at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in
other currencies are translated into functional currencies
at exchange rates prevailing on the reporting date.
Non-monetary assets and liabilities denominated in other
currencies and measured at historical cost or fair value are
translated at the exchange rates prevailing on the dates on
which such values were determined.
All exchange differences are included in the consolidated
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.
Exchange differences which are regarded as an adjustment to
interest costs on foreign currency borrowings, are capitalized
as part of borrowing costs in qualifying assets.
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
362
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.
(T) 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.
(U) Buyers’ Credit/ Suppliers’ 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 Group at a later date providing working capital
timing benefits. These are normally settled up to twelve
months (for raw materials) and up to 36 months (for project
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/ suppliers’
credit (under Trade 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 presented within borrowings
in the consolidated balance sheet. Interest expense on these are
recognised in the finance cost.
(V) 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.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
- 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.
(W) Borrowing costs
Borrowing cost includes interest expense as per effective
interest rate (EIR) and exchange differences arising from
foreign currency borrowings to the extent they are regarded as
an adjustment to the interest cost.
Borrowing costs directly relating to the acquisition, construction
or production of a qualifying capital project under construction
are capitalised and added to the project cost during construction
until such time that the assets are substantially ready for
their intended use i.e. when they are capable of commercial
production. Borrowing costs relating to the construction phase
of a service concession arrangement is capitalised as part of
the cost of the intangible asset. Where funds are borrowed
specifically to finance a project, the amount capitalised
represents the actual borrowing costs incurred. Where surplus
funds are available out of money borrowed specifically to finance
a qualifying capital project, the income generated from such
short-term investments is deducted from the total capitalized
borrowing cost. If any specific borrowing remains outstanding
after the related asset is ready for its intended use or sale, that
borrowing then becomes part of general borrowing. Where the
funds used to finance a project form part of general borrowings,
the amount capitalised is calculated using a weighted average
of rates applicable to relevant general borrowings of the Group
during the year.
All other borrowing costs are recognised in the consolidated
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).
(X) 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 equity. Share options
whenever exercised, would be satisfied with treasury shares.
(Y) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on
hand and short-term money market deposits which have
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.
(Z) 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.
3(b) APPLICATION OF NEW AND REVISED STANDARDS
(A) The Group has adopted with effect from April 1, 2018,
the following new standards and amendments:
• Ind AS 115: Revenue from contracts with customers
The Group has adopted Ind AS 115 Revenue from Contracts
with customers with effect from April 1, 2018 which
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. As per
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the Group’s current revenue recognition practices, transfer
of control happens at the same point as transfer of risk and
rewards thus not effecting the revenue recognition. The
amount of revenue recognised reflects the consideration
to which the Group expects to be entitled in exchange for
those goods or services.
Under this standard, services provided post transfer of
control of goods are treated as separate performance
obligation and requires proportionate revenue to be
deferred along with associated costs and to be recognized
over the period of service. The Group provides shipping
and insurances services after the date of transfer of control
of goods and therefore has identified it as a separate
performance obligation. As per the result of evaluation of
contracts of the relevant revenue streams, it is concluded
that the impact of this change is immaterial to the Group
and hence no accounting changes have been done.
The Group has products which are provisionally priced
at the date revenue is recognised. Revenue in respect of
such contracts are recognised when control passes to the
customer and is measured at the amount the Group 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, subsequent movements
in provisional pricing are accounted for 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 has been
included in total revenue from operations on the face of the
consolidated statement of profit and loss. The accounting
for revenue under Ind AS 115 does not, therefore, represent
a substantive change from the Group’s previous practice for
recognising revenue from sales to customers.
Further, export incentives received from Government that
were included within ‘other operating revenue’ are now
included within ‘other operating income’.
The Group has adopted the modified transitional approach
as permitted by the standard under which the comparative
financial information is not restated. The accounting
changes required by the standard are not having material
effect on the recognition or measurement of revenues and
no transitional adjustment is recognised in retained earnings
at April 1, 2018. Additional disclosures as required by Ind AS
115 have been included in these financial statements.
Previous period accounting policy: 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 the Group 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.
364
Certain of the Group’s sales contracts provide for provisional
pricing based on the price on The London Metal Exchange
(“LME”) and crude index, as specified in the contract, 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 represents
the Group’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
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 rates arrived at based on the
principles laid down under the relevant Tariff Regulations as
notified by the regulatory bodies, as applicable.
• Amendment to Ind AS 23: Borrowing Cost
The amendment clarifies that an entity considers any
borrowings made specifically for the purpose of obtaining
a qualifying asset as part of the general borrowings, when
substantially all of the activities necessary to prepare
that asset for its intended use or sale are complete.
The amendment is applicable to borrowing costs incurred
on or after the beginning of the annual reporting period
in which the entity first applies those amendments.
The amendment is effective from April 1, 2019. Since this
amendment is clarificatory in nature, the Group has applied
the amendment prospectively from the current reporting
year i.e. for the borrowing costs incurred on or after
April 01, 2018.
Based on the Amendment, the Group has now capitalized
certain borrowing costs on general borrowings. This has
resulted in capitalization of interest expense of ` 545 Crore for
the year ended March 31, 2019 and a corresponding increase
in depreciation of ` 3 Crore. The consequent incremental
impact on profit for the year net of tax was ` 369 Crore and
on the basic and diluted earnings per share was ` 1.00/ share
and ` 0.99/ share respectively.
The change did not have any significant impact on the
Group’s consolidated balance sheet and the consolidated
statement of cash flows.
(B) 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.
I. Ind AS 116 – Lease
Ind AS 116, Leases, replaces the existing standard on
accounting for leases, Ind AS 17, with effect from April 1,
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
2019. This standard introduces a single lessee accounting
model and requires a lessee to recognize a ‘right of use
asset’ (ROU) and a corresponding ‘lease liability’ for all
leases. Lease costs will be recognised in the consolidated
statement of profit and loss over the lease term in the form
of depreciation on the ROU asset and finance charges
representing the unwinding of the discount on the lease
liability. In contrast, the accounting requirements for lessors
remain largely unchanged.
The Group acts as a lessee in lease arrangements mainly
involving office premises and other properties. The Group
has elected to apply the modified retrospective approach
on transition, and accordingly the comparative figures
will not be restated. For contracts in place at this date, the
Group will continue to apply its existing definition of leases
under current accounting standards (“grandfathering”),
instead of reassessing whether existing contracts are
or contain a lease at the date of application of the new
standard. Further, as permitted by Ind AS 116, the Group
will not bring leases of low value assets or short-term leases
with 12 or fewer months remaining on to consolidated
balance sheet.
Transition to Ind AS 116 does not have a material effect on the
Group’s Financial Statements.
II. Amendments to standards
The following amendments are applicable to the Group from
April 01, 2019. The impacts of these are currently expected to
be immaterial:
Reference
Name / Brief
Annual Improvements
to Ind AS (2018)
The amendments comprise of changes in
Ind AS 103, Ind AS 111 and Ind AS 12
Ind AS 19
Ind AS 28
Ind AS 109
Ind AS 12
Employee benefits - Plan Amendment,
Curtailment or Settlement
Investments in Associates and Joint
Ventures - Long-term Interests in
Associates and Joint Ventures
Financial Instruments - Prepayment
Features with Negative Compensation
Income Taxes - Uncertainty over Income
Tax Treatments
policies that have the most significant effect on the
amounts recognized in the financial statements are as
given below:
(A) 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 42.
Changes in reserves as a result of change in management
assumptions could impact the depreciation rates and the
carrying value of assets (refer note 6).
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 consolidated 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.
During the financial year ended March 31, 2018, the Group
had recognized impairment reversal (net) against exploration
and evaluation oil and gas assets. The details of impairment
reversal and the assumptions and sensitivities used are
disclosed in note 33. Carrying values of exploration and
evaluation assets are disclosed in note 6.
3(c) 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.
iii) Carrying value of developing / producing oil and
gas assets:
Management performs impairment tests on the Group’s
developing/ producing oil and gas assets where indicators
of impairment or impairment reversal of previous recorded
impairment are identified in accordance with Ind AS 36.
During the financial year ended March 31, 2018, the Group
had recognised impairment reversal of its developing/
producing oil and gas assets in Rajasthan. During the current
year, an impairment reversal has been recorded in the oil
and gas assets in Krishna Godavari (KG) basin. The details
of impairment charge/reversal and the assumptions and
sensitivities used are disclosed in note 33.
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
In the current year, the management has reviewed the key
assumptions i.e. future production, oil prices, discount to
price, Production sharing contract (PSC) life, discount rates,
etc. for all of its oil and gas assets. Based on analysis of
events that have occurred since then, there did not exist
any indication that the assets may be impaired or previously
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recorded impairment charge may reverse except for the
assets in KG basin. Hence, detailed impairment analysis has
not been conducted in the current financial year, except for
assets in KG basin.
Carrying values of oil & gas assets are disclosed in note 6.
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 Proved and probable reserves, resource
estimates (with an appropriate conversion
factor) considering the expected permitted
mining volumes and, in certain cases,
expansion projects.
Commodity Prices Management's best estimate benchmarked
Exchange Rates
Discount Rates
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 impairment charge/reversal and the assumptions
used and carrying values are disclosed in note 33 and
6 respectively.
v) 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 the Company 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 had assessed the recoverable value of all its assets
and liabilities associated with existing mining leases which led
to a non-cash impairment charge in the financial year ended
March 31, 2018. There are no significant changes subsequent
to the financial year ended March 31, 2018.
Details of impairment charge and method of estimating
recoverable value is disclosed in note 33.
vi) 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
366
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 an annual basis 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 of profit and loss 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
vii) 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.
viii) 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 41(b). 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.
ix) 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
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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 (refer note 34).
Environmental Clearance for the Expansion Project shall
be processed after a mandatory public hearing and in the
interim, ordered the Company to cease construction and all
other activities on site for the proposed Expansion Project
with immediate effect. The Ministry of Environment and
Forests (MoEF) has delisted the expansion project since the
matter is sub judice. Separately, SIPCOT vide its letter dated
May 29, 2018, cancelled 342.22 acres of the land allotted
for the proposed Expansion Project. Further the TNPCB
issued orders on June 7, 2018 directing the withdrawal of the
Consent to Establish (CTE) which was valid till March 31, 2023.
The Company has approached Madras High Court by way of
writ petition challenging the cancellation of lease deeds by
SIPCOT pursuant to which an interim stay has been granted.
The Company has also filed Appeals before the TNPCB
Appellate Authority challenging withdrawal of CTE by the
TNPCB, the matter is pending for adjudication.
The details of MAT assets (recognized and unrecognized) are
set out in note 34.
x) Copper operations India
In an appeal filed by the Group against the closure order of
the Tuticorin Copper smelter by Tamil Nadu Pollution Control
Board (“TNPCB”), the appellate authority National Green Tribunal
(“NGT”) passed an interim order on May 31, 2013 allowing the
copper smelter to recommence operations and appointed an
Expert Committee to submit a report on the plant operations.
Post the interim order, the plant recommenced operations
on June 23, 2013. Based on Expert Committee’s report on
the operations of the plant stating that the plant’s emission
were within prescribed standards and based on this report,
NGT ruled on August 08, 2013 that the Copper smelter could
continue its operations and recommendations made by the
Expert Committee be implemented in a time bound manner.
The Group has implemented all of the recommendations.
TNPCB has filed an appeal against the order of the NGT before
the Supreme Court of India.
In the meanwhile, the application for renewal of Consent
to Operate (CTO) for existing copper smelter, required as
per procedure established by law was rejected by TNPCB
in April 2018. The Company has filed an appeal before the
TNPCB Appellate Authority challenging the Rejection Order.
During the pendency of the appeal, there were protests
by a section of local community raising environmental
concerns and TNPCB vide its order dated May 23, 2018
ordered closure of existing copper smelter plant with
immediate effect. Further, the Government of Tamil Nadu,
issued orders dated May 28, 2018 with a direction to seal the
existing copper smelter plant permanently. The Company
believes these actions were not taken in accordance with the
procedure prescribed under applicable laws. Subsequently,
the Directorate of Industrial Safety and Health passed orders
dated May 30, 2018, directing the immediate suspension
and revocation of the Factory License and the Registration
Certificate for the existing smelter plant.
Separately, the Company has filed a fresh application for
renewal of the Environmental Clearance for the proposed
Copper Smelter Plant 2 (Expansion Project) dated March 12,
2018 before the Expert Appraisal Committee of the MoEF
wherein a sub-committee was directed to visit the Expansion
Project site prior to prescribing the Terms of Reference.
In the meantime, the Madurai Bench of the High Court of
Madras in a Public Interest Litigation held vide its order
dated May 23, 2018 that the application for renewal of the
The Company has appealed this before the National Green
Tribunal (NGT). NGT vide its order on December 15, 2018 has
set aside the impugned orders and directed the TNPCB to pass
fresh orders for renewal of consent and authorization to handle
hazardous substances, subject to appropriate conditions for
protection of environment in accordance with law.
The State of Tamil Nadu and TNPCB approached Supreme
Court in Civil Appeals on January 02, 2019 challenging
the judgment of NGT dated December 15, 2018 and the
previously passed judgment of NGT dated August 08, 2013.
The Supreme Court vide its judgment dated February 18, 2019
set aside the judgments of NGT dated December 15, 2018
and August 08, 2013 on the basis of maintainability alone.
The Company has also filed a writ petition before Madras
High Court challenging the various orders passed against the
Company in 2018 and 2013. The case was heard on March 01,
2019 wherein the Company pressed for interim relief for
care and maintenance of the plant. The Madras High Court
has directed the State of Tamil Nadu and TNPCB to file their
counter to our petition for interim relief.
The Company is taking appropriate legal measures to
address the matters.
Even though there can be no assurance regarding the final
outcome of the process and the timing of such process in
relation to the approval for the expansion project, as per the
Company’s assessment, it is in compliance with the applicable
regulations and expects to get the necessary approvals in
relation to the existing operations and the expansion project
and is not expecting any material loss on this account.
The carrying value of the assets under operation and under
expansion as at March 31, 2019 is ` 2,385 Crore and
` 1,046 Crore respectively.
The Company has carried out an impairment analysis
considering the key variables and concluded that there
exists no impairment. The Company has done an additional
sensitivity with a delay in commencement of operations both
at the existing and expansion plants by two years and noted
that the recoverable amount of the assets would still be in
excess of their carrying values.
xi) PSC Extension
Rajasthan Block
On October 26, 2018, the Government of India (GoI), acting
through the Directorate General of Hydrocarbons (DGH) has
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 367
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
granted its approval for a ten-year extension of the Production
Sharing Contract (PSC) for the Rajasthan Block (RJ), with effect
from May 15, 2020 subject to certain conditions. The GoI has
granted the extension under the Pre-NELP Extension Policy,
the applicability whereof to PSC for RJ is sub-judice and
pending before the Hon’ble Delhi High Court. To address two
of the conditions stated by DGH, the Company has taken the
following steps:
• Submission of Audited Accounts and End of year statement:
The Company and one of the joint venture partners have
divergent views on the cost oil entitlement and therefore
the End of Year statement for the year ended March 31,
2018 and Investment Multiple as at March 31, 2018 could
not be finalized. To resolve this, the Company has initiated
arbitration proceedings against the joint venture partner.
Consequentially, profit petroleum pertaining to the said
Block for the year ended March 31, 2019 and applicable
Investment Multiple calculated based on management’s
cost oil computation (resulting into Government’s share of
profit petroleum @ 40% for DA-1 & DA-2 and @20% for DA-3
for FY 2018-19), remains provisional. The computation is
after considering relevant independent legal advice.
• Profit Petroleum: DGH has raised a demand for the period
upto March 31, 2017 for Government’s additional share of
Profit Oil based on its computation of disallowance of cost
incurred over the initially approved Field Development Plan
(FDP) of pipeline project and retrospective allocation of
certain common costs between Development Areas (DAs) of
Rajasthan Block. The Company believes that it has sufficient
as well as reasonable basis (pursuant to PSC provisions &
approvals) for having claimed such costs and for allocating
common costs between different DAs and has responded to
the government accordingly. Group’s view is also supported
by an independent legal opinion.
Pursuant to the aforesaid approval of October 26, 2018,
the Group has recomputed its reserves till 2030 and has
reclassified exploration costs of ` 8126 Crore to property plant
and equipment and `6724 Crore to capital work-in-progress.
This has led to a reduction in depletion charge of ` 60 Crore
for the period from October 26, 2018 till March 31, 2019.
Ravva Block
The Government of India has granted its approval for a
ten-year extension of PSC for Ravva Block with effect from
October 28, 2019, subject to certain conditions. The extension
has been granted with a 10% increase in GOI share of profit oil.
Management has reviewed the conditions and is confident of
fulfilling or disposing of such conditions.
The Group does not expect any material adjustment to the
financial statements on account of the aforesaid matters.
(B) Significant judgements
(i) 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.
368
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 25(A).
(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 past events and it is probable
that the Group will be required to settle that obligation.
Where it is management’s assessment that the outcome
cannot be reliably quantified or is uncertain, the claims are
disclosed as contingent liabilities unless the likelihood of an
adverse outcome is remote. Such liabilities are disclosed in the
notes but are not provided for in the financial statements.
When considering the classification of 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 37.
(iii) 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 Ind
AS 115 and to assess the recoverability of withheld revenue
currently accounted for as receivables.
In assessing this critical judgment, management considered
favourable external legal opinions the Group has obtained in
relation to the claims. In addition the fact that the contracts are
with government owned companies implies the credit risk is
low [refer note 8(c)].
(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 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. The details of
exceptional items are set out in note 33.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
4. BUSINESS COMBINATION
a) Electrosteel Steels Limited
On June 04, 2018, the Group, through its subsidiary Vedanta Star Limited (VSL) acquired management control over Electrosteel Steels
Limited (ESL) as the previous Board of Directors of ESL was reconstituted on that date. Further, on June 15, 2018, pursuant to the
allotment of shares to VSL, the Group holds 90% of the paid-up share capital of ESL through VSL. The acquisition will complement the
Group’s existing Iron Ore business as the vertical integration of steel manufacturing capabilities has the potential to generate significant
efficiencies. ESL was admitted under corporate insolvency resolution process in terms of the Insolvency and Bankruptcy Code, 2016 of
India. The financial results of ESL from the date of acquisition have been included in the Consolidated Financial Statements of the Group.
The fair value of the identifiable assets and liabilities of ESL as at the date of the acquisition were as follows:
Particulars
Non-Current Assets
Property, Plant and Equipment
Capital work-in-progress
Income tax assets
Other non-current assets
Total non-current assets
Current Assets
Inventories
Trade receivables
Other financial assets
Cash and cash equivalents
Other bank balances
Other current assets
Total current assets
Total Assets (A)
Non-current liabilities
Provisions
Total non-current liabilities
Current liabilities
Borrowings
Trade payables
Other financial liabilities
Provisions
Other current liabilities
Total current liabilities
Total Liabilities (B)
Net Assets (C=A-B)
Satisfied by:
Fair value of total purchase consideration (D)
Non-Controlling interest on acquisition (10% of net assets after adjustment of borrowings from immediate parent of ₹
` 3,554 Crore) (E)
Net Bargain Gain (C-D-E)
(` in Crore)
Fair Value At
Acquisition
4,388
457
5
56
4,906
820
196
88
245
311
100
1,760
6,666
10
10
7
778
255
2
98
1,140
1,150
5,516
5,320
196
-
Since the date of acquisition, ESL has contributed ` 4,195 Crore and ` 277 Crore to the Group revenue and profit before taxation
respectively for the year ended March 31, 2019.
If ESL had been acquired at the beginning of the year, the revenue of the Group would have been ` 91,559 Crore and the profit
before tax of the Group would have been ` 13,540 Crore.
The 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 realized. Property has been valued using the Market
approach - Sales comparison method (SCM). This method models the behavior of the market by comparing with similar
properties that have been recently sold/ rented or for which offers to purchase/ rentals have been made. Plant and
equipment have been valued using the cost approach - Depreciated replacement cost (DRC) method. For estimating DRC,
gross current replacement cost is depreciated in order to reflect the value attributable to the remaining portion of the total
economic life of the plant and equipment. The method takes into account the age, condition, depreciation, obsolescence
(economic and physical) and other relevant factors, including residual value at the end of the plant and equipment’s
economic life.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 369
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Non-controlling interest has been measured at the non-controlling interest’s proportionate share of ESL’s identifiable net assets.
Acquisition costs of ` 18 Crore related to ESL acquisition have been charged to consolidated statement of profit and loss.
b) Avanstrate Inc.
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 815 million (` 46 Crore) was
extended to ASI. ASI is involved in manufaturing of glass substrate. Provisional fair values that were determined as at March 31,
2018 for consolidation were finalised during the current year.
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 value of the identifiable assets and liabilities of ASI as adjusted for measurement period adjustments as at the date of the
acquisition were as follows. The comparative period amounts have been restated accordingly.
Particulars
Non-Current Assets
Property, Plant and Equipment
Capital work-in-progress
Other intangible assets
Deferred 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)
Deffered tax liabilities
Other non-current liabilities
Total non-current liabilities
Other current liabilities
Total Liabilities (B)
Net Assets (C=A-B)
Satisfied by:
Cash consideration paid for 51.63% stake & debt acquired
Less:Fair Value of Conversion option asset on debt acquired net of the fair value of Put
option liability towards acquisition of Non-controlling interests
Total purchase consideration (D)
Non-Controlling interest on acquisition (48.37% of net assets after adjustment of fair
value of borrowings from immediate parent of ` 902 Crore) (E)
Bargain Gain (C-D-E)
Provisional Fair
Value
Fair Value
Adjustments
(` in Crore)
Fair Value At
Acquisition
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
1,010
(108)
902
2
353
-
-
-
-
-
-
-
-
-
-
-
-
-
129
-
129
-
129
(129)
-
-
-
107
(236)
1,385
163
205
126
41
1,920
138
166
151
64
519
2,439
631
529
23
1,183
128
1,311
1,128
1,010
(108)
902
109
117
The net debit of ` 69 Crore recognized in Capital Reserve in the Statement of Changes in Equity, is the difference between the
above bargain gain of ` 117 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 carrying amount of trade and other receivables equals the fair value of trade and other 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
370
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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.
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 was charged
to the consolidated statement of profit and loss for the year
ended March 31, 2018 under exceptional items.
c) Acquisition of new hydrocarbon blocks
In August, 2018, Vedanta Limited was awarded 41
hydrocarbon blocks out of 55 blocks auctioned under the
open acreage licensing policy (OALP) by Government of India
(GOI). The blocks awarded to Vedanta Limited comprise of
33 onshore and 8 offshore blocks. Vedanta Limited will share
a specified proportion of the net revenue from each block
with GOI and has entered into 41 separate revenue sharing
contracts (RSC) on October 01, 2018.
The bid cost of ` 3,811 Crore represents Vedanta Limited’s
total committed capital expenditure on the blocks for the
committed work programs during the exploration phase.
Vedanta Limited has provided bank guarantees for minimum
work programme commitments amounting to ` 2,137
Crore for the 41 exploration blocks. These have been
disclosed in note 37.
5. 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 is also
in the business of port operations and manufacturing of
glass substrate and steel. 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”).
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.
Pricing 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 ` 67 Crore
and ` 133 Crore, which is at cost, for the year ended March 31,
2019 and March 31, 2018 respectively.
The following table presents revenue and profit information
and certain assets and liabilities information regarding the
Group’s business segments as at and for the year ended
March 31, 2019 and March 31, 2018 respectively.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 371
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
II) Geographical segment analysis
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 segments
Revenue by geographical segment (Gross of excise duty)
India
China
UAE
Malaysia
Others
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
59,160
53,612
3,787
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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
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
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4,186
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Information about major customer
No single customer has accounted for more than 10% of the Group’s revenue for the year ended March 31, 2019 and
March 31, 2018.
Disaggregation of Revenue
Below table summarises the disaggregated revenue from contracts with customers
Oil
Gas
Zinc Metal
Lead Metal
Silver Metals and bars
Iron Ore
Metallurgical coke
Pig Iron
Copper products
Aluminium products
Power
Steel products
Others
Revenue from contracts with customers
Revenue from contingent rents (refer note 25(A))
Gains/ (losses) on provisionally priced contracts
Total revenue
374
(` in Crore)
Year ended
March 31, 2019
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Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 375
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*
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Intangible assets
Particulars
i) Gross Block
As at April 1, 2017
Additions
Acquisition through Business Combination
(refer note 4(b))
Disposals/ Adjustments
Exchange differences
As at April 1, 2018
Additions
Transfers from Property, Plant & Equipment
Disposals/ Adjustments
Exchange differences
As at March 31, 2019
Accumulated amortisation and
impairment
As at April 1, 2017
Charge for the year
Disposals/ Adjustments
Impairment charge
for the year (refer note 33)
Exchange differences
As at April 1, 2018
Charge for the year
Disposals/ Adjustments
Transfers from Property, Plant & Equipment
Exchange differences
As at March 31, 2019
Net Book Value
As at April 1, 2017
As at April 1, 2018
As at March 31, 2019
Software
License
Right to use
Mining Rights
Port concession
rights (refer
note k)
Brand &
Technological
know-how
298
28
2
(9)
2
321
15
1
(4)
9
68
1
-
-
-
69
-
-
-
-
381
0
-
-
-
381
-
-
-
-
672
7
-
(2)
-
677
4
-
(3)
-
-
-
203
-
17
220
-
-
-
4
(` in Crore)
Total
1,419
36
205
(11)
19
1,668
19
1
(7)
13
342
69
381
678
224
1,694
242
28
(9)
-
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35
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122
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62
57
575
555
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5
-
-
0
5
22
-
-
(0)
27
-
215
197
498
79
(9)
150
1
719
89
(5)
1
8
812
921
949
882
a) Plant and equipment include refineries, smelters, power
plants, railway sidings, ships, aircrafts, river fleets and
related facilities.
b) During the year ended March 31, 2019, interest capitalised
was ` 834 Crore (March 31, 2018: ` 349 Crore).
c) Freehold land includes gross block of ` 259 Crore
(March 31, 2018: ` 240 Crore), accumulated amortisation of ₹
` 226 Crore (March 31, 2018: ` 191 Crore), which is available
for use during the lifetime of the Production Sharing Contract
of the respective Oil and Gas blocks.
d) Certain property, plant and equipment are pledged as
collateral against borrowings, the details related to which have
been described in Note 19 on “Borrowings”.
e) 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 and the Group has filed the civil
suits for the same.
f) The land transferred to BALCO by National Thermal Power
Corporation Ltd. (NTPC) vide agreement dated June 20, 2002
comprising of 171.44 acres land for BALCO’s 270 MW captive
power plant and it’s allied facilities and 34.74 acres land for
staff quarters of the said captive power plant is yet to be
registered in favour of BALCO due to non availability of title
deeds from NTPC. The arbitration is pending between Balco
and NTPC (presently in appeal before Delhi High Court), in
which transfer of title deeds is also sub-judice and is posted for
hearing on October 15, 2019.
g) The Division Bench of the Hon’ble High Court of
Chhattisgarh has vide its order dated February 25, 2010,
upheld that BALCO is in legal possession of 1,804.67 acres
of Government land. Subsequent to the said order, the State
Government has decided to issue the lease deed in favour
of 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 BALCO is being
used in contravention of the Forest Conservation Act, 1980
even though the said land has been in its possession prior to
376
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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
BALCO.The matter is presently sub-judice before the Hon’ble
Supreme Court and fixed for hearing on May 8, 2019.
h) Property, plant and Equipments, Capital work-in-progress
and exploration intangibles assets under development net
block includes share of jointly owned assets with the joint
venture partners ` 23,387 Crore (March 31, 2018: ` 21,235
Crore). Refer note 3(c)(A)(xi) for reasons for transfer of
exploration intangibles assets under development to property,
plant and equipment and capital work-in-progress.
i) 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 ` 85 Crore
(March 31, 2018: ` 81 Crore) are adjusted to the cost of
respective item of property, plant and equipment.
Capital work-in-progress includes foreign currency exchange
of NIL incurred during the year (March 31, 2018: ` 17 Crore
loss) on such long term foreign currency monetary liabilities.
j) 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 and Intangibles schedule
Less: Depreciation capitalised
Less: Cost allocated to joint ventures
(` in Crore)
For the year ended
March 31, 2019
For the year ended
March 31, 2018
8,141
89
8,230
(10)
(28)
6,252
79
6,331
(21)
(27)
As per Consolidated Statement of Profit and Loss
8,192
6,283
k) Vizag General Cargo Berth Private Limited (VGCB), a
special purpose vehicle and wholly owned by the Company,
was incorporated for the coal berth mechanization and
upgradation at Visakhapatnam port.
The project is to be carried out on a design, build, finance,
operate and transfer basis and the concession agreement
between Visakhapatnam Port and VGCB was signed in
2010. Visakhapatnam Port has provided, in lieu of Royalty,
an exclusive license to VGCB for designing, engineering,
financing, constructing, equipping, operating, maintaining,
and transferring the project/project facilities and services.
The concession period is 30 years from the date of the award
of the concession. The capacity of upgraded berth is 10.18
mmtpa and that the Vishakhapatnam Port is 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 Tariff Authority for Major Project (TAMP)
notification. The changes in tariff rates are linked to the
variation in 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. The project is in
commercial operations since 2013.
l) Title deeds of freehold land of 206 acres relating to
Electrosteel Steels Limited is not available with the Group.
The Group is in the process of having the same regularised.
m) As at March 31, 2019, TSPL’s assets consisting of land,
building and plant and machinery having net carrying value
of ` 391 Crore (March 31, 2018: ` 391 Crore), ` 193 Crore
(March 31, 2018: ` 193 Crore) and ` 9,353 Crore (March 31,
2018: ` 9,753 Crore) respectively have been given on
operating lease (refer note 3(c)(B)(i)).
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 377
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 7. FINANCIAL ASSETS - INVESTMENTS
A) Non-current 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)
Other Investments
(II)
Investments at fair value through profit and loss
Investment in structured instrument - Unquoted (refer note 38)
(III) Investment in Equity Shares (fully paid)
Associate Companies – Unquoted
Gaurav Overseas Private Limited - 3,23,000 (March 31, 2018 - 3,23,000) 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 - 2,72,29,539 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
B) Current 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 b
Investment in India Grid trust - quoted b
Total
a)
Particulars
Aggregate amount of quoted investments, and market value thereof
Aggregate amount of unquoted investments
Total
b) Includes investment in related parties ` 329 Crore (March 31, 2018: ` 534 Crore) Refer note 38.
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
104
149
11
0
4,772
0
4
3
2
0
(5)
4,891
11
0
-
0
4
3
2
0
(5)
164
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
104
4,792
(5)
4,891
149
20
(5)
164
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
-
2,803
8,409
6,383
13,276
106
28,174
11,536
7,444
6,631
122
28,536
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
21,791
6,383
28,174
21,092
7,444
28,536
378
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 8. FINANCIAL ASSETS - TRADE RECEIVABLES
Particulars
Unsecured
Less: Provision for expected credit loss
Total
As at March 31, 2019
As at March 31, 2018
Non-current
4,219
(531)
3,688
Current
4,020
(38)
3,982
Total
Non-current
8,239
(569)
7,670
1,572
(225)
1,347
Current
4,309
(340)
3,969
(` in Crore)
Total
5,881
(565)
5,316
a) The interest free credit period given to customer is up to 90 days. Also refer note 22C(d)
b) For amount due and terms and conditions of related party receivables see note 38.
c) In July 2017, the Appellate Tribunal for Electricity dismissed the appeal filed by one of the Group’s subsidiaries, Talwandi Sabo
Power Limited (TSPL) with respect to the interpretation of how the calorific value of coal and costs associated with it should
be determined. However, APTEL had allowed payment of shunting and unloading charges, TSPL filed an appeal before the
Honourable Supreme Court, which by an order dated March 07, 2018 has decided the matter in favour of TSPL. PSPCL has not
paid the due amount as per the direction of the Supreme court. Therefore, TSPL filed its contempt petition before the Supreme
court. The matter is pending for adjudication. The outstanding trade receivables in relation to this dispute as at March 31, 2019 is
` 1,135 Crore (March 31, 2018: ` 802 Crore).
In another matter relating to assessment of whether there has been a change in law following the execution of the Power
Purchase Agreement, the Appellate Tribunal for Electricity has dismissed the appeal in July 2017 filed by TSPL. TSPL filed an
appeal before the Honourable Supreme Court to seek relief which is yet to be listed. The outstanding trade receivables in relation
to this dispute and other matters as at March 31, 2019 is ` 1,065 Crore (March 31, 2018: ` 831 Crore). The Group, based on
external legal opinion and its own assessment of the merits of the case, remains confident that it is highly probable that the
Supreme court will uphold TSPL’s appeal and has thus continued to treat these balances as recoverable.
Additionally, as at March 31, 2018, ` 767 Crore was outstanding on account of certain disputes relating to computation
of tariffs and differential revenues recognised with respect to tariffs pending finalisation by the Odisha State Regulatory
Commission. During the current year the said disputes were settled. However, the customer has raised certain claims on the
Company in respect of short supply of power for which a provision of ` 218 Crore has been made. A Minutes of Meeting (MOM)
has been signed with the customer and subsequently Vedanta Limited has received payment of ` 55 Crore in March 2019.
Pending ratification of MOM by Odisha Electricity Regulatory Commission (OERC) and adjudication on certain issues related to
the claim, the customer has withheld ` 1,248 Crore, which the Company is confident of recovering.
9. FINANCIAL ASSETS - LOANS
Particulars
Non-current
Current
Total
Non-current
Current
Total
As at March 31, 2019
As at March 31, 2018
(` in Crore)
Unsecured, considered good
Loans to related parties (Refer Note 38)
Loan to employees
Security Deposit
Others
Total
5
1
14
-
20
74
8
-
-
82
79
9
14
-
102
7
2
14
-
23
70
9
-
3
82
77
11
14
3
105
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 379
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT As at March 31, 2019
Non-current
Current
10. FINANCIAL ASSETS - OTHERS
Particulars
Bank deposits a,b
Site restoration asset b
Unsecured, considered good
Receivables from related parties (refer
Note 38)
Security deposits
Advance recoverable (oil and gas
business)
Others c
Unsecured, considered credit
impaired
Security deposits
Balance with government authorities
Others c
Less: Provision for expected credit loss
Total
23
546
-
165
-
349
42
-
-
(42)
1,083
As at March 31, 2018
Non-current
Current
2,438
471
-
167
-
-
26
19
(` in Crore)
Total
2,438
471
26
186
Total
23
546
47
188
2,166
-
-
47
23
2,166
246
595
66
1,160
1,226
1
18
415
(434)
2,482
43
18
415
(476)
3,565
43
-
-
(43)
3,142
7
18
349
(374)
1,205
50
18
349
(417)
4,347
a) Bank deposits includes fixed deposit with maturity more than twelve months of ` 20 Crore (March 31, 2018: ` 20 Crore) under
lien with bank and margin money of ` 2 Crore (March 31, 2018: NIL). As at March 31, 2018, bank deposits also include interest
reserve created against interest payment on loans from banks of ` 103 Crore.
b) Bank deposits and site restoration asset earns interest at fixed rate based on respective deposit rate
c) Others include claims receivables, unbilled revenue (contract assets). It also includes advance profit petroleum ` 297 Crore
(Refer note 41(d)). The outstanding balance of contract assets was ` 146 Crore.
11. OTHER ASSETS
Particulars
Non-current
Current
Total
Non-current
Current
Total
As at March 31, 2019
As at March 31, 2018
(` in Crore)
Unsecured, considered good
Capital advances
Advances other than capital advances
Security deposits
Advances for supplies to related party
Advances for supplies
Others
Balance with government authorities a,b
Leasehold land prepayments c
Others d
Unsecured, considered doubtful
Capital advances
Advance for supplies
Balance with government authorities
Others d
Less: Provision for doubtful advances
Total
2,132
-
2,132
2,381
-
2,381
0
-
-
521
431
1,134
12
-
3
390
(405)
4,218
-
558
1,478
609
14
796
-
48
-
5
(53)
3,455
0
558
1,478
1,130
445
1,930
12
48
3
395
(458)
7,673
0
-
-
596
371
790
37
-
3
397
(437)
4,138
-
386
1,879
755
12
940
-
49
-
5
(54)
3,972
0
386
1,879
1,351
383
1,730
37
49
3
402
(491)
8,110
a) Includes ` 58 Crore (March 31, 2018: ` 58 Crore), being Company’s share of gross amount of ` 86 Crore (March 31, 2018: ` 86
Crore) paid under protest on account of Education Cess and Secondary Higher Education Cess for the year ended 2013-14.
b) Includes `18 Crore (March 31, 2018: ` 97 Crore), being Company’s share of gross amount of ` 26 Crore (March 31, 2018:
` 139 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.
d) Others include claim receivables, advance recoverable (oil and gas business), prepaid expenses and export
incentive receivables.
380
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 12. 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, 2019
3,860
1,732
(` in Crore)
As at
March 31, 2018
3,189
2,561
2,481
46
1,329
109
1,080
652
1,838
71
13,198
2,986
26
535
91
478
591
1,465
45
11,967
a) Inventory held at net realisable value ` 3,760 Crore (March 31, 2018: ` 103 Crore) as at March 31, 2019.
b) The write down of inventories amounting to ` 156 Crore (March 31, 2018: ` 44 Crore) has been charged to the consolidated
statement of profit and loss.
c) For method of valuation for each class of inventories, refer Note 3(a)(L).
13. CASH AND CASH EQUIVALENTS
Particulars
Balances with banks a
Bank deposits with original maturity of less than 3 months (including interest accrued thereon) b,c
Cash on Hand
Total
As at
March 31, 2019
4,236
3,052
1
7,289
(` in Crore)
As at
March 31, 2018
3,468
767
1
4,236
a) Includes Nil (March 31, 2018: ` 1,646 Crore) in unpaid dividend account of the subsidiary, attributable to the Company’s
shareholding which has been remitted subsequent to the year end.
b) Restricted funds of ` 60 Crore (March 31, 2018: ` 17 Crore) held as collateral in respect of closure costs.
c) Bank deposits earn interest at fixed rate based on respective deposit rate.
d) Cash and cash equivalents for the purpose of Statement of Cash Flows comprise the following:
Particulars
Cash and cash equivalents as above
Earmarked unpaid dividend accounts (Refer note 14)
Total
14. OTHER BANK BALANCES
Particulars
Bank deposits with original maturity of more than 3 months but less than 12 months (including interest
accrued thereon) a
Bank deposits with original maturity of more than 12 months (including interest accrued thereon) b,c,d
Earmarked unpaid dividend accounts e
Earmarked escrow account g
Total
As at
March 31, 2019
7,289
96
7,385
(` in Crore)
As at
March 31, 2018
4,236
231
4,467
As at
March 31, 2019
845
(` in Crore)
As at
March 31, 2018
402
131
96
8
1,080
347
231
-
980
a) Includes ` 591 Crore (March 31, 2018: ` 193 Crore) on lien with banks and margin money of ` 134 Crore (March 31, 2018: ` 39 Crore).
b) Includes NIL (March 31, 2018: ` 8 Crore) on lien with banks.
c) Restricted funds of NIL (March 31, 2018: ` 60 Crore) held as collateral in respect of closure costs.
d) Restricted funds of ` 127 Crore (March 31, 2018: Nil) held as interest reserve created against interest payment on loans from banks.
e) Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed dividends or unpaid dividend.
f) Bank deposits earns interest at fixed rate based on respective deposit rate.
g) Earmarked escrow account includes amount restricted in use as it relates to unclaimed redeemable preference shares.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 381
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 15. SHARE CAPITAL
Particulars
A) Authorised equity share capital
Opening and closing balance (equity shares of `1 each with
voting rights)
Authorised preference share capital a
Opening and closing balance (preference shares of `10 each)
B)
Issued , subscribed and paid up
Equity shares of `1 each with voting rights bc
Total
As at March 31, 2019
As at March 31, 2018
Number
(in Crore)
Amount
(` in Crore)
Number
(in Crore)
Amount
(` in Crore)
4,402
4,402
4,402
4,402
301
3,010
301
3,010
372
372
372
372
372
372
372
372
a) Redeemable Preference Shares of ` 3,010 Crore were redeemed on October 27, 2018 i.e. 18 months from the date of
allotment as per the scheme of amalgamation of Cairn India Limited with Vedanta Limited. An equivalent amount of ₹ ` 3,010
Crore has been transferred from General Reserve to Capital Redemption Reserve.
b) Includes 3,08,232 (March 31, 2018: 3,08,232) equity shares kept in abeyance. These shares are not part of listed equity capital
and pending allotment as they are sub-judice.
c) Includes 1,49,98,702 (March 31, 2018: 92,33,871) equity shares held by Vedanta Limited ESOS Trust (Refer Note 16).
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, 2019
As at March 31, 2018
No. of Shares
held (in Crore)
128.01
9.93
40.15
4.43
3.82
186.34
% of holding
34.44
2.67
10.80
1.19
1.03
50.13
No. of Shares
held (in Crore)
128.01
9.93
40.15
4.43
3.82
186.34
% of holding
34.44
2.67
10.80
1.19
1.03
50.13
* The % of holding has been calculated on the issued and subscribed share capital as at the 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”).
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)*
* These were redeemed on October 27, 2018.
E) Details of shareholders holding more than 5% shares in the Company *
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
75
301
75
301
Particulars
Twin Star Holdings Limited
Twin Star Holdings Limited #
Finsider International Company Limited
# 2,48,23,177 ADS, held by CITI Bank N.A. New York as a depository.
As at March 31, 2019
As at March 31, 2018
No. of Shares
held (in Crore)
% of holding
128.01
9.93
40.15
34.44
2.67
10.80
No. of Shares
held (in Crore)
128.01
9.93
40.15
% of holding
34.44
2.67
10.80
* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.
As per the records of the Company, including its register of shareholders/members, the above shareholding represents legal
ownership of shares.
382
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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 had 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
priority to any payment of capital on the equity shares out of
the surplus of Vedanta Limited.
iii) 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, 2019 - 24,87,79,452
equity shares were held in the form of 6,21,94,863 ADS
(March 31, 2018 - 24,84,24,696 equity shares in form of
6,21,06,174 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 2,01,305 equity shares (March 31, 2018:
204,525 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.
16. 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.
During the year, on redemption of preference shares, ` 3,010
Crore has been transferred from General reserve to Preference
share redemption reserve.
d) Capital reserve: The balance in capital reserve has mainly
arisen pursuant to extinguishment of non-controlling interests
of erstwhile Cairn India Limited and acquisition of ASI.
Further, changes in capital reserve are due to recognition/
derecognition of put option liability and non controlling
interests pertaining to ASI.
e) Legal reserve is created at Fujairah Gold FZC in accordance
with free zone regulations.
f) Treasury share represents 1,49,98,702 (March 31, 2018:
92,33,871) 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 29.
17. 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, 2019, NCIs hold an economic interest by
virtue of their shareholding of 35.08%, 49.00%, 26.00%,
48.37% and 10.00% in Hindustan Zinc Limited (HZL), Bharat
Aluminium Company Limited (BALCO), Black Mountain
Mining (BMM), Avanstrate Inc. (ASI) and Electrosteel Steels
Limited (ESL) respectively. 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.
The principal place of business of HZL, BALCO and ESL is in
India, that of BMM is in South Africa, that of Avanstrate (Japan)
Inc. is in Japan, South Korea and Taiwan.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 383
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The table below shows summarized financial information of subsidiaries of the Group that have non-controlling interests.
The amounts are presented before inter-company elimination.
Particulars
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity attributable to owners of the Group
Non-controlling interests*
As at March 31, 2019
HZL
21,427
21,575
1,168
7,744
22,131
11,959
BALCO
12,965
2,728
4,686
5,928
2,591
2,488
Others
11,166
3,461
8,363
1,986
3,571
780
* ` 73 Crore loss attributable to NCI of ASI transferred to put option liability. Refer note 4(b) & 21.
Particulars
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity attributable to owners of the Group
Non-controlling interests*
As at March 31, 2018
HZL
19,401
24,145
1,062
6,004
23,683
12,797
BALCO
13,110
2,023
4,941
4,982
2,657
2,553
Others
5,830
938
3,812
475
1,804
611
* ` 66 Crore gain attributable to NCI of ASI transferred to put option liability. Refer note 4(b) & 21.
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 outflow from investing activities
Net cash inflow/(outflow) from financing activities
Net cash inflow/(outflow)
*Refer note 4(a) for acquisition of ESL
For the year ended March 31, 2019
HZL
22,909
7,892
5,123
2,769
(94)
(61)
(33)
7,798
5,062
2,736
3,574
8,781
(1,092)
(9,630)
(1,941)
BALCO
10,554
(96)
(49)
(47)
(36)
(18)
(18)
(132)
(67)
(65)
-
2,061
(574)
(1,155)
332
Others*
6,482
128
216
(88)
(307)
(229)
(78)
(181)
(13)
(167)
-
1,428
(1,903)
671
196
(` in Crore)
Total
45,558
27,764
14,217
15,658
28,293
15,227
(` in Crore)
Total
38,341
27,106
9,815
11,461
28,144
15,961
(` in Crore)
Total
39,945
7,924
5,290
2,634
(437)
(308)
(129)
7,485
4,982
2,504
3,574
12,270
(3,569)
(10,114)
(1,413)
384
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 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 outflow
**Refer note 4(b) for acquisition of ASI
HZL
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)
For the year ended March 31, 2018
BALCO
9,028
Others**
1,842
38
19
19
54
28
26
92
47
45
-
744
(200)
(549)
(5)
363
288
75
272
202
70
635
490
145
-
632
(1,230)
381
(217)
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)
Particulars
Changes in NCI(2)
(1) Refer note 4 (a) for acquisition of ESL
(2) Refer note 4 (b) for acquisition of ASI
For the year ended March 31, 2019
BALCO
-
Others
196
For the year ended March 31, 2018
BALCO
-
Others
109
HZL
-
HZL
-
(` in Crore)
Total
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)
(` in Crore)
Total
196
(` in Crore)
Total
109
18. 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 and other current borrowings.
The Group’s policy is to use current and non-current 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 385
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The following table summarizes the capital of the Group:
Particulars
Cash and cash equivalents (Note 13)
Other bank balances (Note 14)
Non-current bank deposits (Note 10)
Current investments (Note 7 B)
Structured investment net of related liabilities (refer note 38)
Total (a)
Non-current borrowings (Note 19)
Current borrowings (Note 19)
Current maturities of long term debt (Note 21)
Total (b)
Net debt (c=(b-a))
Total equity (d)
Total capital (e = equity + net debt)
Gearing ratio (times) (c/e)
19. FINANCIAL LIABILITIES - BORROWINGS
A) Non-current borrowings
Particulars
At amortised cost
Secured
Non convertible debentures
Term loans from banks
- Rupee term loans
- Foreign currency term loans
- External commercial borrowings
Others
Unsecured
Deferred sales tax liability
Non convertible bonds
Term loans from banks (Foreign currency)
Redeemable preference shares
Non-current borrowings (A)
Less: Current maturities of long term debt (Refer note 21(b))
Total non-current borrowings (Net)
Current borrowings (Refer Note 19B)
Total borrowings (A+B)
B) Current borrowings
Particulars
Secured
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
Others
Unsecured
Loans repayable on demand from banks
Commercial paper
Packing credit in foreign currencies from banks
Working capital loan
Amounts due on factoring
Others
Total
386
(` in Crore except otherwise stated)
As at
March 31, 2019
As at
March 31, 2018
7,289
1,080
23
28,174
2,702
39,268
34,721
22,982
8,523
66,226
26,958
77,524
4,236
980
2,438
28,536
-
36,190
26,789
21,951
9,419
58,159
21,969
79,273
1,04,482
1,01,242
0.26
0.22
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
14,072
11,575
24,185
3,543
653
516
87
126
60
2
43,244
(8,523)
34,721
22,982
66,226
16,969
3,264
617
513
91
114
55
3,010
36,208
(9,419)
26,789
21,951
58,159
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
16
798
42
-
640
41
24
18,456
492
1,690
718
65
22,982
127
477
41
636
718
-
-
17,687
2,105
95
65
-
21,951
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS The Group has discounted trade receivables on recource basis of ` 1,358 Crore (March 31, 2018: ` 783 Crore). Accordingly, the
monies received on this account are shown as borrowings as the trade receivables do not meet de-recognition criteria.
a) Details of Non-convertible debentures issued by Group have been povided below (Carrying value):
Particulars
8.75% due September 2021
9.18% due July 2021
9.27% due July 2021
8.50% due June 2021
8.75% due April 2021
8.50% due April 2021
8.55% due April 2021
7.80% due December 2020
9.00% due November 2020*
8.25% due September 2020
7.85% due August 2020
9.45% due August 2020
8.00% due July 2020**
8.00% due July 2020
8.70% due April 2020
7.95% due April 2020**
7.50% due November 2019
8.20% due November 2019
8.25% due October 2019
7.75% due September 2019
8.65% due September 2019
7.60% due May 2019
9.17% due July 2018
9.10% due April 2018
8.91% due April 2018
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
250
1,000
999
1,649
250
2,349
1,000
500
200
425
500
250
-
-
-
250
-
-
500
-
425
500
2,000
2,000
200
300
600
300
200
300
300
250
150
350
-
-
-
200
300
600
300
200
300
300
250
150
350
1,200
2,500
1,000
14,072
11,575
* The debenture holders of these NCDs and the Company have put and call option at the end of 1 year from the respective date of the allotment
of the NCDs
** 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
b) 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 and financial institutions taken by
the parent and subsidiaries. The details of security provided by the Group in various countries, to various lenders on the asset of
the parent and subsidiaries are as follows -
Particulars
Secured long term borrowings
Secured short term borrowings
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
42,969
1,537
44,506
32,938
1,999
34,937
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 387
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Facility Category
Project buyers’
credit from
banks
Working capital
loans*
External
commercial
borrowings
Non convertible
debentures
Security details
Secured by exclusive charge on the assets of Vedanta Limited’s aluminium division at
Jharsuguda imported under facility and first charge on Jharsuguda aluminium’s current
assets on pari passu basis
Other secured project buyer’s credit
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 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 Vedanta Limited, 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)
First charge on the entire current asset of Vedanta Limited, present and future, 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
First pari passu charge on current assets of Vedanta Limited
Secured by charge on current assets of AvanStrate.
Other secured working capital loans
The facility is secured by first pari passu charge on all movable property, plant and
equipments related to power plants and aluminium smelters of BALCO located at
Korba both present and future along with secured lenders
The facility is secured by first pari passu charge on all movable project assets
related to 1200 MW power project and 3.25 LTPA Smelter project both present and
future along with secured lenders at BALCO
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 and
specifically exclude the 1MTPA alumina refinery of the company along with 90 MW
power plant in Lanjigarh and all its related expansions
Secured by 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 90 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
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, Odisha. The Lanjigarh Refinery Expansion Project shall
specifically exclude the 1 MTPA alumina refinery of Vedanta Limited along with
90 MW power plant in Lanjigarh and all its related capacity expansions
Secured by way of “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
Secured by a first pari passu charge on the whole of the present and future of the movable
fixed assets of 2400 MW (600 MW*4) Power Plant of Vedanta Limited at Jharsuguda location
Secured by first pari passu charge on movable and/or immovable fixed assets of TSPL
with a minimum asset cover of 1 times during the tenure of NCD
Secured by way of first pari-passu charge on the specific movable and/or immovable
Fixed Assets 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
Secured by way of first pari passu charge on all present and future of the movable
fixed assets of 2400 MW (600 MW*4) Power Plant of Vedanta Limited at Jharsuguda
location, as may be identified and notified by the Issuer to the Security Trustee from
time to time, with minimum asset coverage of 1 time of the aggregate face value of
debentures outstanding at any point of time
First pari passu charge over the immovable property (excluding of leasehold land
and coal block assets) of BALCO. First pari passu charge on the hypothecated assets
(excluding current assets) of BALCO.
Other secured non- convertible debuntures.
As at
March 31, 2019
16
(` in Crore)
As at
March 31, 2018
125
-
114
124
2
308
170
552
639
49
280
360
42
-
309
-
588
-
-
167
292
344
325
850
850
800
800
1,250
1,250
2,000
2,000
3,998
2,500
3,249
1,050
425
425
1,000
-
500
500
-
2,200
388
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
Facility Category
Term loans
from banks
(Include rupee
term loans
and foreign
currency term
loans)
Others
Security details
Secured by first pari passu charge on fixed assets of the TSPL both present and future
First pari passu charge by way of hypothecation/ equitable mortgage on the movable/
immovable assets of the Aluminium Division of Vedanta Limited comprising of alumina
refinery having output of 1 MTPA along with co-generation captive power plant with an
aggregate capacity of 90 MW at Lanjigarh, Odisha; aluminium smelter having output of 1.6
MTPA along with a 1215 (9x135) MW CPP at Jharsuguda , Odisha, both present and future
A pari passu charge by way of hypothecation of all the movable fixed assets of Vedanta
Limited pertaining to its Aluminium Division project consisting of (i) alumina refinery
having output of 1 MTPA (Refinery) along with co-generation captive power plant with
an aggregate capacity of 90 MW at Lanjigarh, Odisha (Power Plant); and (ii) aluminium
smelter having output of 1.6 MTPA along with a 1215 (9x135) MW CPP at Jharsuguda,
Odisha (Smelter) (the Refinery, Power Plant and Smelter). Also, a first pari passu charge
by way of equitable mortgage on the land pertaining to the mentioned project of
aluminium division
Secured by a pari passu charge by way of hypothecation on the movable fixed assets
of the Lanjigarh Refinery Expansion Project including 210 MW Power Project for
the Lanjigarh Refinery Expansion Project. Lanjigarh Refinery Expansion Project shall
specifically exclude the 1 MTPA alumina refinery of Vedanta Limited along with 90 MW
power plant in Lanjigarh and all its related expansions
A pari passu charge by way of hypothecation on the movable fixed assets of Vedanta
Limited pertaining to its Aluminium Division comprising of 1 MTPA alumina refinery
plant with 90 MW captive power plant at Lanjigarh, Odisha and 1.6 MTPA aluminium
smelter plant with 1215 MW captive power plant at Jharsuguda, Odisha
First pari passu charge by way of hypothecation/ equitable mortgage on the movable/
immoveable assets of the Aluminium Division of Vedanta Limited comprising of
alumina refinery having output of 1 MTPA along with co-generation captive power
plant with an aggregate capacity of 90 MW at Lanjigarh, Orissa; aluminium smelter
having output of 1.6 MTPA along with a 1215 (9x135) MW CPP at Jharsuguda , Orissa
and additional charge on Lanjigarh Expansion project, both present and future
A pari passu charge by way of hypothecation/equitable mortgage of the movable/
immovable fixed assets of Vedanta Limited pertaining to its Aluminium Division
comprising of 1 MTPA alumina refinery plant with 90 MW captive power plant at
Lanjigarh, Odisha and 1.6 MTPA aluminium smelter plant with 1215 MW captive power
plant at Jharsuguda, Odisha
Secured by charge on Cairn Energy Hydrocarbons Limited’s (CEHL) all banks accounts,
cash & investments, all receivables and current assets (but excluding any shares issued
to CEHL 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)
As security for the Parent’s (THL Zinc Limited) obligations under the limited guarantee,
the Parent pledges all of its shares and other securities held by it in BMM and is a
security cession and not an outright cession of all its rights, title and interest in and to
all and any claims held by the Parent in and against BMM
The facility is secured by first pari passu charge on all movable property, plant and
equipments related to power plants and aluminium smelters of BALCO located at
Korba both present and future along with secured lenders
Secured by first pari passu charge on movable property, plant and equipments (except
for coal block) of BALCO
Secured by first pari passu charge on all present and future movable fixed assets
including but not limited to plant & machinery ,spares, tools and accessories of BALCO
(excluding coal block assets ) by way of a deed of hypothecation
Unattested deed of Hypothecation executed in favor of Vistra ITCL (India) Limited,
Security Trustee for the lenders of Vedanta Star limited by providing security for the
facility, by a charge, by way of hypothecation over the hypothecated properties of ESL
Secured by Fixed asset (platinum) of AvanStrate
As at
March 31, 2019
3,623
(` in Crore)
As at
March 31, 2018
4,075
5,102
5,521
3,551
3,939
482
1,734
-
-
1,184
1,232
2,984
-
2,624
2,773
415
-
206
194
1,480
1,511
968
988
3,375
-
516
44,506
513
34,937
* Includes loans repayable on demand from banks, packing credit in foreign currencies from banks, amounts due on factoring and others.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 389
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
c) The Company facilities are subject to certain financial and non- financial convenants. The primary convenants which must be
complied with include interest service coverage ratio, 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.
d) Term of repayment of total borrowings outstanding as at March 31, 2019 are provided below:
(` in Crore)
Borrowings
Weighted
average of
interest as
at March
31, 2019
Total
carrying
value
<1 year
1-3 years
3-5 years
>5 years Remarks
Foreign currency term loan
3.96% 3,603
2,684
555
105
261 Repayable in 4 monthly
installments, 44 quarterly
installments, 13 annual installments
Rupee term loan
8.97% 24,185
3,694
7,452
4,630
8,497 Repayable in 757 quarterly
External commercial borrowings
5.32%
653
90
463
104
Non convertible debentures
8.62% 14,072
2,049
12,025
Commercial paper
Working capital loan *
6.09% 18,456
18,456
6.15% 3,046
3,046
installments, 5 installments payable
in the gap of 5 months and 7
months, 2 half yearly installments
and 2 bullet payments
- Repayable in 4 annual installments
for three external commercial
borrowings.
- Repayable in 21 bullet payments
- Repayable in 99 bullet payments
- Export packing credit is repayable
within 1-6 months from the date of
drawal, cash credit can be repaid
anytime as per the availability of
business surplus during the validity
of the facility and working capital
loan is repayable in one bullet
payment.
- Repayable in 15 bullet payments
- Repayable within 6 months
-
-
-
-
-
-
-
-
-
Project buyers' credit from banks
Amounts due on factoring and
others (Current)
Deferred sales tax liability
3.51%
16
16
9.36% 1,464
1,464
NA
87
17
32
46
12 Repayable in 90 monthly
Redeemable preference shares
7.50%
2
2
Non-convertible bonds
Other (Non-current)
0.00%**
5.00%
126
516
-
-
installments
-
-
-
- The redemption and dividend paid
to the preference shares unclaimed
if any, is payable on claim.
6
406 Repayable in 10 annual installments
172
344
- Repayable in 6 Half yearly
installments starting from April
2021.
Total
66,226
31,518
20,699
5,235
9,176
The above maturity is based on the total principal outstanding gross of issue expenses and discounting impact of deferred
sales tax liability.
*Includes loans repayable on demand from banks for ` 822 Crore and packing credit in foreign currency from banks
** Increasing interest rate from 0.00% to 0.50% till maturity
390
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS e) Terms 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
Total
carrying
value
<1 year
1-3 years
3-5 years
>5 years
Remarks
Foreign currency term loan
3.79%
3,319
354
1,510
1,213
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
External commercial borrowings
2.72%
617
-
273
345
installments, 6 installments payable
in the gap of 5 months and 7 months,
10 half yearly installments and 2 bullet
payments
- Repayable in 4 annual installments for
three external commercial borrowings.
Non convertible debentures
8.40% 11,575
4,700
6,375
500
- Repayable in 21 bullet payments
Commercial paper
Working capital loan *
7.37% 17,687
17,687
7.94%
3,354
3,354
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
-
-
-
-
-
-
-
-
- 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
37
41
29 Repayable in 103 monthly installments
-
-
-
-
-
328
- Repayable in 1 bullet payment upon 18
months from date of issuance
412 Repayable in 10 annual installments
164 Repayable in 6 half yearly installments
starting from 4th Year till 6th Year
Non-convertible bonds
Other
Total
0.00% **
2.67%
114
513
-
-
58,159
31,373
15,194
6,272
5,772
The above maturity is based on the total principal outstanding gross of issue expenses and discounting impact of deferred sales
tax liability.
*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
f) Movement in borrowings during the year is provided below:
Particulars
As at April 1, 2017
Cash flow
Borrowings on acquisition through business combination
Other non cash changes
Foreign exchange currency translation differences
As at March 31, 2018
Cash flow
Borrowings on acquisition through business combination
Other non cash changes
Foreign exchange currency translation differences
As at March 31, 2019
Borrowings due
within one year
Borrowings due
after one year
41,314
(8,998)
-
(905)
(41)
31,370
624
7
(853)
357
30,255
(8,271)
631
4,069
105
26,789
7,075
-
935
(78)
(` in Crore)
Total
71,569
(17,269)
631
3,164
64
58,159
7699
7
82
279
31,505
34,721
66,226
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 prefrence shares issued on merger of Cairn India Limited with Vedanta Limited.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 391
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
20. TRADE PAYABLES
Particulars
Trade payables
Trade payables to related party
Operational buyers’ credit / suppliers’ credit
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
9,211
25
8,116
17,352
8,385
41
9,417
17,843
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 38.
c) Operational Buyers’ Credit and Suppliers’ Credit is availed in foreign currency from offshore branches of Indian banks or foreign
banks at an interest rate ranging from 2.5% to 4% per annum and in rupee from domestic banks at interest rate ranging from
8%-9%. These trade credits are largely repayable within 180 days from the date of draw down. Operational Buyers’ credit availed
in foreign currency is backed by Standby Letter of Credit issued under working capital facilities sanctioned by domestic banks.
Part of these facilities are secured by first pari passu charge over the present and future current assets of the Group.
21. FINANCIAL LIABILITIES - OTHERS
Particulars
Liabilities for capital expenditure
Security deposits from vendors and
others
Interest Accrued but not due
Put option liability with non-
controlling interest a
Current maturities of long term debt b
Unpaid/unclaimed dividend
Profit petroleum payable
Dues to related parties (Refer note 38)
Interim dividend payable
Liability for Structured Investment
(Refer note 38)
Other Liabilities c
Total
Non-current
52
11
255
195
-
-
-
-
-
994
62
1,569
As at March 31, 2019
As at March 31, 2018
Current
6,011
162
1,036
-
8,523
96
1,025
96
-
1,076
Total
6,063
173
1,291
195
8,523
96
1,025
96
-
2,070
Non-current
125
10
3
138
-
-
-
-
-
-
Current
3,993
221
886
-
9,419
90
827
33
142
-
(` in Crore)
Total
4,118
231
889
138
9,419
90
827
33
142
-
4,263
22,288
4,325
23,857
-
276
3,057
18,668
3,057
18,944
a) The non-controlling shareholders of ASI have an option to offload their shareholding to the Group. The option is exercisable at
any time within the period of three years following the fifth anniversary of the date of shareholders’ agreement (December 22,
2017) at a price higher of ` 52 (US$ 0.757) per share and the fair market value of the share. Therefore, the liability is carried at
higher of the two. Subsequent changes to the put option liability are treated as equity transaction and hence accounted for in
equity. (Refer note 4(b))
b) Current maturities of long-term debt consist of :
Particulars
Deferred sales tax liability
Term loans from banks
Rupee term loans
Foreign currency term loans
External commercial borrowings
Redeemable non convertible debentures
Redeemable preference shares
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
17
10
3,681
2,684
90
2,049
2
8,523
1,345
354
-
4,700
3,010
9,419
c) Includes revenue received in excess of entitlement interest of ` 2,878 Crore (March 31, 2018 : ` 1,297 Crore) and
reimbursement of expenses, interest accrued on other than borrowings, liabilities related to claim etc.
392
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS 22. FINANCIAL INSTRUMENTS
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, 2019
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
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
32,946
227
-
-
30
-
-
33,203
Fair value
through profit
or loss
-
1,064
-
543
1,607
Fair value
through profit
or loss
25,733
521
-
-
33
-
-
26,287
Fair value
through profit
or loss
-
3,633
-
166
3,799
Fair value
through other
comprehensive
income
115
-
-
-
-
-
-
115
Derivatives
designated
as hedging
instruments
-
-
-
7
7
Fair value
through other
comprehensive
income
2,963
-
-
-
-
-
-
2,963
Derivatives
designated
as hedging
instruments
-
-
-
95
95
Derivatives
designated
as hedging
instruments
-
-
-
-
48
-
-
48
Amortised
cost
66,226
16,288
15,139
-
97,653
Derivative
designated
as hedging
instruments
-
-
-
-
119
-
-
119
Amortised
cost
58,159
14,210
9,387
-
81,756
Amortised
cost
-
7,443
102
3,565
-
7,289
1,080
19,479
Total
carrying value
33,061
7,670
102
3,565
78
7,289
1,080
52,845
Others**
-
-
195
-
195
Total carrying
value
66,226
17,352
15,334
550
99,462
Amortised
cost
-
4,795
105
4,347
-
4,236
980
14,463
Others**
-
-
138
-
138
Total carrying
value
28,696
5,316
105
4,347
152
4,236
980
43,832
Total carrying
value
58,159
17,843
9,525
261
85,788
(` in Crore)
Total fair
value
33,061
7,670
102
3,565
78
7,289
1,080
52,845
(` in Crore)
Total fair
value
66,185
17,352
15,334
550
99,421
(` in Crore)
Total fair
value
28,696
5,316
105
4,347
152
4,236
980
43,832
(` in Crore)
Total fair
value
58,236
17,843
9,525
261
85,865
* Investments exclude equity investment in associates and joint ventures which are accounted as per the equity method of accounting and hence not
considered. Also includes structured investment (Refer note 38).
** Represents net put option liability with non-controlling interests accounted for at fair value. (Refer note 4(b) and note 21).
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 393
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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, 2019 and March 31, 2018 measured
at fair value:
As at March 31, 2019
Financial Assets
At fair value through profit or loss
Investments*
Derivative financial assets**
Trade receivables
At fair value through other comprehensive income
Investments
Derivatives designated as hedging instruments
Derivative financial assets**
Total
Financial Liabilities
At fair value through profit or loss
Derivative financial liabilities**
Trade payable
Derivatives designated as hedging instruments
Derivative financial liabilities**
Other financial liabilities - Net put option liability with non-controlling interests
accounted for at fair value. (Refer note 4(b) and note 21).
Total
As at March 31, 2018
Financial Assets
At fair value through profit or loss
Investments
Derivative financial assets**
Trade receivables
At fair value through other comprehensive income
Investments
Derivatives designated as hedging instruments
Derivative financial assets**
Total
Financial Liabilities
At fair value through profit or loss
Derivative financial liabilities**
Trade payable
Derivatives designated as hedging instruments
Derivative financial liabilities**
Other financial liabilities - Net put option liability with non-controlling interests
accounted for at fair value. (Refer note 4(b) and note 21).
Total
* Includes structured investment (Refer note 38)
** Refer D below
394
Level 1
Level 2
(` in Crore)
Level 3
6,712
26,153
-
-
104
-
30
227
-
48
6,816
26,458
81
-
-
11
-
92
Level 1
Level 2
(` in Crore)
Level 3
-
-
-
-
-
543
1,064
7
-
1,614
Level 1
Level 2
7,566
-
-
18,167
33
521
149
2,803
-
7,715
119
21,643
-
-
-
195
195
(` in Crore)
Level 3
-
-
-
11
-
11
Level 1
Level 2
(` in Crore)
Level 3
-
-
-
-
-
166
3,633
95
-
3,894
-
-
-
138
138
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
The below table summarises the fair value of borrowings which are carried at amortised cost as at March 31, 2019 and
March 31, 2018
As at March 31, 2019
Financial Liabilities
Borrowings
Total
As at March 31, 2018
Financial Liabilities
Borrowings
Total
Level 1
-
-
Level 1
-
-
Level 2
66,185
66,185
Level 2
58,236
58,236
(` in Crore)
Level 3
-
-
(` in Crore)
Level 3
-
-
The fair value of the financial assets and liabilities are at the
amount that would be received to sell an asset and paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. The following methods
and assumptions were used to estimate the fair values:
• Investments traded in active markets are determined by
reference to quotes from the financial institutions; for
example: Net asset value (NAV) for investments in mutual
funds declared by mutual fund house. For other listed
securities traded in markets which are not active, the quoted
price is used wherever the pricing mechanism is same as
for other marketable securities traded in active markets.
Other current investments and structured investments
are valued by referring to market inputs including quotes,
trades, poll, primary issuances for securities and /or
underlying securities issued by the same or similar issuer for
similar maturities and movement in benchmark security etc.
• 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.
• 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.
• 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 the 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.).
• 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.
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, 2019
and March 31, 2018 have been measured as at respective
date. As such, the fair values of these financial instruments
subsequent to reporting date may be different than the
amounts reported at each year-end.
There were no significant transfers between Level 1, Level 2
and Level 3 during the 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 395
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The risk management framework aims to:
• improve financial risk awareness and risk transparency
Group’s policies. The internal control measures are effectively
supplemented by regular internal audits.
• 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
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.
Equity price risk
As at March 31, 2019, the Group held economic interest in a
structured investment for the equity shares of Anglo American
Plc (AA Plc), a company listed on the London Stock Exchange,
having fair value of ` 4,772 Crore (31 March 2018: Nil). The
instrument is exposed to equity price movements of AA Plc,
subject to a put option embedded therein (Refer note 38).
Set out below is the impact of 10% increase/ decrease in equity prices on pre-tax profit/ (loss) for the year ended March 31, 2019
and pre-tax equity as a result of changes in value of the investment:
For the year ended March 31, 2019
Financial asset investment
Total Exposure
(fair value)
Effect on pre-tax
profit/(loss) of a
10% increase in
the equity price
Effect on pre-tax
equity of a 10%
increase in the
equity price
Effect on pre-tax
profit/(loss) of a
10% decrease in
the equity price
Effect on pre-tax
equity of a 10%
decrease in the
equity price
(` in Crore)
Structured investment
4,772
412
-
(193)
-
The above sensitivities are based on change in price of the
underlying equity shares of AA plc and provide the estimated
impact of the change on profit and equity assuming that all
other variables remain constant.
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.
396
Group is also exposed to the movement of international crude
oil price and the discount in the price of Rajasthan crude oil to
Brent price.
Financial instruments with commodity price risk are entered
into in relation to following activities:
• economic hedging of prices realised on commodity
contracts
• cash flow hedging of revenues, forecasted highly probable
transactions
Aluminium
The requirement of the primary raw material, alumina, is partly
met from own sources and the rest is purchased primarily
on negotiated price terms. Sales prices are linked to the LME
prices. At present the Group on selective basis hedges the
aluminium content in outsourced alumina to protect its margins.
The Group also enters into hedging arrangements for its
aluminium sales to realise average month of sale LME prices.
Copper
The Group’s custom smelting copper operations at Tuticorin
is 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
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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.
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.
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.
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, 2019, the value of net financial assets linked
to commodities (excluding derivatives) accounted for on
provisional prices was ` 186 Crore (March 31, 2018: liability
of ` 2,988 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, 2019.
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.
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:
For the year ended March 31, 2019
Copper
For the year ended March 31, 2018
Copper
Total Exposure
Effect on pre-tax profit/(loss) of
a 10% increase in the LME
Effect on total equity of a 10%
increase in the LME
185
(19)
-
(` in Crore)
Total Exposure
Effect on pre-tax profit/(loss) of a
10% increase in the LME
Effect on total equity of a 10%
increase in the LME
3,558
(356)
-
(` in Crore)
The above sensitivities are based on volumes, costs, exchange
rates and other variables and provide the estimated impact
of a change in LME prices on profit and equity assuming that
all other variables remain constant. A 10% decrease in LME
prices would have an equal and opposite effect on the Group’s
financial statements.
The impact on pre-tax profit/(loss) mentioned above includes
the impact of a 10% increase in closing copper LME for
provisionally priced copper concentrate purchased at Copper
division custom smelting operations in India of ` 74 Crore
(March 31, 2018: ` 368 Crore), which is pass through in nature
and as such will not have any impact on the profitability.
Liquidity risk
The Group requires funds both for short-term operational
needs as well as for long-term investment programmes mainly
in growth projects. The Group generates sufficient cash flows
from the current operations which together with the available
cash and cash equivalents, short-term investments and and
structured investment net of deferred consideration payable
for such 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.
(a) 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.
CRISIL changed the outlook for the Group’s long-term
bank facilities and its Non-Convertible Debentures (NCD)
programme to CRISIL AA / Stable from CRISIL AA /Positive
during the year on account of delay in deleveraging amid
weaker commodity prices. India Ratings has revised the
outlook on Vedanta Limited’s ratings to IND AA / Stable from
IND AA/ Positive on account of weaker profitability resulting in
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 397
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
delay in deleveraging. 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 ` 6,508 Crore, and cash, bank,
structured investment (net of related liabilities) and current investments of ` 39,268 Crore as at March 31, 2019, are expected to
be sufficient to 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, 2019
Payments due by year
Borrowings*
Derivative financial liabilities
Trade Payables and Other financial liabilities**
As at March 31, 2018
Payments due by year
Borrowings*
Derivative financial liabilities
Trade Payables and Other financial liabilities**
<1 year
35,591
451
30,239
66,281
<1 year
34,624
143
26,276
61,043
1-3 years
25,591
99
1,119
26,809
1-3 years
18,093
118
135
18,346
3-5 years
7,374
-
195
7,569
3-5 years
7,417
-
138
7,555
>5 years
11,148
-
-
11,148
>5 years
7,440
-
-
7,440
(` in Crore)
Total
79,704
550
31,553
1,11,807
(` in Crore)
Total
67,574
261
26,549
94,384
*Includes Non-current borrowings, current borrowings, current maturities of non-current borrowings, committed interest payments on borrowings and
interest accrued on borrowings.
**Includes both Non-current and current financial liabilities and committed interest payment, as applicable. Excludes current maturities of non-current
borrowings and interest accrued on borrowings.
The Group had access to following funding facilities :
As at March 31, 2019
Funding facility
Fund/non-fund based
As at March 31, 2018
Funding facility
Fund/non-fund based
Total Facility
66,793
Drawn
51,780
Total Facility
57,190
Drawn
46,486
(` in Crore)
Undrawn
15,013
(` in Crore)
Undrawn
10,704
Collateral
The Group has pledged financial instruments with carrying
amount of ` 21,751 Crore and inventories with carrying
amount of ` 9,678 Crore as per the requirements specified in
various financial facilities in place. The counterparties have an
obligation to release the securities to the Group when financial
facilities are surrendered.
(b) Foreign 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.
398
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 Indian Rupee (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 operations
which have a US dollar functional currency. Natural hedges
available in the business are identified at each entity level and
hedges are placed only for the net exposure. Short-term net
exposures are hedged progressively based on their maturity.
A more conservative approach has been adopted for project
expenditures to avoid budget overruns, where cost of the
project is calculated taking into account the hedge cost.
The hedge mechanisms are reviewed periodically to ensure
that the risk from fluctuating currency exchange rates is
appropriately managed.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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 carrying amount of the Group’s financial assets and liabilities in different currencies are as follows :
Currency
INR
USD
Others
Total
(` in Crore)
As at March 31, 2019
As at March 31, 2018
Financial
Asset
33,001
14,186
5,658
52,845
Financial
liabilities
69,524
25,782
4,156
99,462
Financial
Asset
35,709
7,189
934
43,832
Financial
liabilities
61,588
22,289
1,911
85,788
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 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 monetary financial assets/liabilities:
For the year ended March 31, 2019
USD
INR
For the year ended March 31, 2018
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
1,029
(101)
-
-
(` in Crore)
Effect of
10% strengthening
of functional currency on
pre-tax profit/ (loss)
Effect of
10% strengthening
of functional currency on
equity
1,504
(64)
0
-
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, 2019, the Group’s net debt of ` 26,958 Crore
(March 31, 2018: ` 21,969 Crore) comprises debt of ` 66,226
Crore (March 31, 2018: ` 58,159 Crore) offset by cash,
bank, structured investment (net of related liabilities) and
current investments of ` 39,268 Crore (March 31, 2018:
` 36,190 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 399
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
The exposure of the Group’s financial assets as at March 31, 2019 to interest rate risk is as follows:
Financial Assets
Floating rate
financial assets
Fixed rate
financial assets
(` in Crore)
Non-interest
bearing financial
assets
14,674
19,226
18,945
Total
52,845
The exposure of the Group’s financial liabilities as at March 31, 2019 to interest rate risk is as follows:
Floating rate
financial liabilities
Fixed rate
financial liabilities
Total
(` in Crore)
Non-interest
bearing financial
liabilities
Financial Liabilities
99,462
30,923
43,691
24,848
The exposure of the Group’s financial assets as at March 31, 2018 to interest rate risk is as follows:
Total
Floating rate
financial assets
Fixed rate
financial assets
(` in Crore)
Non-interest
bearing financial
assets
Financial Assets
43,832
19,653
14,682
9,497
The exposure of the Group’s financial liabilities as at March 31, 2018 to interest rate risk is as follows:
Total
Floating rate
financial liabilities
Fixed rate financial
liabilities
(` in Crore)
Non-interest
bearing financial
liabilities
Financial Liabilities
85,788
23,242
44,303
18,243
Considering the net debt position as at March 31, 2019 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% movement in interest rates on floating rate financial assets/ liabilities
(net) on profit/(loss) and equity assuming that the changes occur at the reporting date and has been calculated based on risk
exposure outstanding as of date. The year end balances are not necessarily representative of the average debt outstanding
during the year. This analysis also assumes that all other variables, in particular foreign currency rates, remain constant.
Increase in interest rates
0.50%
1.00%
2.00%
(` in Crore)
Effect on pre-tax
profit/(loss) during
the year ended
March 31, 2019
Effect on pre-tax
profit/(loss) during
the year ended
March 31, 2018
(81)
(162)
(325)
(18)
(36)
(72)
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,
contract assets, 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.
400
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS The carrying value of the financial assets represents the
maximum credit exposure. The Group’s maximum exposure
to credit risk as at March 31, 2019 and March 31, 2018 is ₹
` 52,845 Crore and ` 43,832 Crore respectively.
The maximum credit exposure on financial guarantees given
by the Group for various financial facilities is described in Note
37 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,
2019, that defaults in payment obligations will occur except
as described in Note 8 and 10 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, site restoration fund 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, 2019 and
March 31, 2018:
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
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
6,428
3,421
873
336
599
2,532
10,768
773
390
728
1,547
6,859
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 Group based on past experiences does not expect any
material loss on its receivables.
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.
Movement in allowances for Financial Assets (Trade receivables and Financial assets - others)
The change in the allowance for financial assets (current and non-current) is as follows:
Particulars
As at April 01, 2017
Allowance made during the year
Reversals/ write off during the year
Exchange differences
As at March 31, 2018
Allowance made during the year
Reversals/ write off during the year
Exchange differences
As at March 31, 2019
(` in Crore)
Trade
receivables
Financial
assets - Others
546
234
(215)
0
565
4
0
0
569
411
4
0
2
417
45
(5)
19
476
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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 401
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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.
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 through OCI 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, 2019.
The Group uses foreign exchange contracts from time to time
to optimize currency risk exposure on its foreign currency
transactions. The Group hedged part of its foreign currency
exposure on capital commitments during the year ended
2019. 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 ending March 31, 2020 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
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/economic hedge
- Commodity contracts
- Forward foreign currency contracts
- Cross currency swap
Total
Non-current
Non - qualifying hedges/economic hedge
- Forward foreign currency contracts
- Commodity contracts
Total
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.
Fair value hedges
The fair value hedges relate to forward covers taken to hedge
currency exposure and commodity price risks.
The Group’s sales are on a quotational period basis, generally
one month to three months after the date of delivery at a
customer’s facility. The Group enters into forward contracts
for the respective quotational period to hedge its commodity
price risk based on average LME prices. Gains and losses
on these hedge transactions are substantially offset by the
amount of gains or losses on the underlying sales. Net gains
and losses are 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 the consolidated statement of profit and loss.
Non-designated economic hedges
The Group enters into derivative contracts which are not
designated as hedges for accounting purposes, but provide
an economic hedge of a particular transaction risk or a risk
component of a transaction. Hedging instruments include
copper, aluminium future contracts on the LME and certain
other derivative instruments. Fair value changes on such
derivative instruments are recognized in the consolidated
statement of profit and loss.
The fair value of the Group’s derivative positions recorded
under derivative financial assets and derivative financial
liabilities are as follows:
As at March 31, 2019
As at March 31, 2018
Assets
Liabilities
Assets
Liabilities
(` in Crore)
3
37
3
5
5
25
0
78
-
-
-
6
1
-
-
72
366
6
451
99
-
99
118
1
-
-
6
27
0
152
-
-
-
95
0
-
-
16
31
1
143
117
1
118
* Refer consolidated statement of profit and loss and consolidated statement of changes in equity for the change in the fair value of cash flow hedges.
402
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
273
246
2,201
51
2,771
(` in Crore)
Others
(Refer d)
50
1
-
-
-
-
-
-
51
1
-
-
-
-
-
Restoration,
rehabilitation and
environmental
costs (Refer c)
1,934
174
(46)
(41)
84
8
24
64
2,201
18
(13)
(8)
93
136
27
23. PROVISIONS
Particulars
Non-current
Current
Total
Non-current
Current
Total
As at March 31, 2019
As at March 31, 2018
(` in Crore)
Provision for employee benefits a (Refer Note 30)
- Retirement benefit
- Others
Provision for restoration, rehabilitation and
environmental costs b
Other Provisions b
Total
145
10
2,441
-
2,596
122
200
13
52
387
267
210
151
59
2,454
2,151
52
2,983
-
2,361
122
187
50
51
410
a) Includes gratuity, compensated absences, deferred cash bonus etc. Others include leave encashment etc.
b) Particulars
As at April 01, 2017
Additions
Utilised
Unused amounts reversed
Unwinding of discount (Refer note 31)
Revision in estimates
Acquisitions through business combinations
Exchange differences
As at March 31, 2018
Additions
Amounts Utilised
Unused amounts reversed
Unwinding of discount (Refer note 31)
Revision in estimates
Exchange differences
As at March 31, 2019
2,454
52
c) Restoration, rehabilitation and environmental
The provisions for restoration, rehabilitation and environmental
liabilities represent the management’s best estimate of the
costs which will be incurred in the future to meet the Group’s
obligations under existing Indian, Australian, Namibian, South
African and Irish law and the terms of the Group’s exploration
and other licences and contractual arrangements.
These amounts are calculated by considering discount
rates within the range of 2% to 10%, and become payable
on closure of mines and are expected to be incurred over
a period of one to thirty years . The lower range of discount
rate is at Cairn India & Zinc International operations in
Ireland and higher range is at Zinc International operations in
African Countries.
Within India, the principal restoration and rehabilitation
provisions are recorded within Oil & Gas division where
a legal obligation exists relating to the oil and gas fields,
where costs are expected to be incurred in restoring the
site of production facilities at the end of the producing
life of an oil field. The Group recognises the full cost of
site restoration as a liability when the obligation to rectify
environmental damage arises.
An obligation to incur restoration, rehabilitation and
environmental costs arises when environmental disturbance
is caused by the development or ongoing production from a
producing field.
d) Other provisions
Other provisions include provision for disputed cases
and claims.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 403
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 24. OTHER LIABILITIES
Particulars
Non-current
Current
Total
Non-current
Current
As at March 31, 2019
As at March 31, 2018
Amount payable to owned post-employment
benefit trust (refer note 38)
Other Statutory Liabilities a
Deferred government grants b
Advance from customer c
Advance from related party
Other liabilities
Total
-
-
4,409
-
-
-
77
77
3,121
182
9,194
2
196
3,121
4,591
9,194
2
196
-
-
4,303
-
-
-
4,409
12,772
17,181
4,303
84
2,527
168
4,944
-
198
7,921
(` in Crore)
Total
84
2,527
4,471
4,944
-
198
12,224
a) Statutory liabilities mainly includes contribution to Provided fund, ESIC, withholding taxes, goods & services tax, 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) Advance from customers are contract liabilities and include amounts received under long term supply agreements.
The advance payment plus a fixed rate of return/ discount will be settled by supplying respective commodity over a period up
to twenty four months under an agreed delivery schedule as per the terms of the respective agreements. As these are contracts
that the Group expects, and has the ability, to fulfil through delivery of a non-financial item, these are recognised as advance from
customers and will be recognised as revenue as and when control of respective commodities is transfered to customers under
the agreements. The portion of the advance that is expected to be settled within the next 12 months has been classified as a
current liability.
25. A) REVENUE FROM OPERATIONS
Sale of products (Net of excise duty)a
Add: Excise duty
Total Sale of products (Gross of excise duty)b
Sale of services
Revenue from contingent rents (refer note 37)
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
89,009
-
89,009
220
1,672
90,901
89,090
1,057
90,147
308
1,556
92,011
a) With effect from July 01, 2017, Goods and Services 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.
b) Revenue from sale of products and from sale of services for the year ended March 31, 2019 comprises of revenue from
contracts with customers of ` 90,075 Crore and a net loss on mark-to-market of ` 846 Crore on account of gains/ losses relating
to sales that were provisionally priced as at March 31, 2019 with the final price settled in the current year, gains/ losses relating
to sales fully priced during the year, and marked to market gains/ losses relating to sales that were provisionally priced as at
March 31, 2019. It further includes ` 3,787 Crore for which contract liabilities existed at the beginning of the year.
Revenue from sale of products are recorded at a point in time and those from sale of services are recognised over a
period of time.
B) OTHER OPERATING INCOME
Export incentives
Scrap sales
Miscellaneous income
Total
404
Year ended
March 31, 2019
458
396
293
1,147
(` in Crore)
Year ended
March 31, 2018
418
277
217
912
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
26. OTHER INCOME
Net gain on investment measured at FVTPLa
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
- Others
Interest on income tax refund
Dividend Income from
- financial assets at FVTPL
- financial assets at FVOCI
Deferred government grant income (Refer note 23)
Miscellaneous income
Total
a) Includes mark to market gain of `1,041 Crore relating to structured investment (Refer note 38)
27. CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS*
Particulars
Opening Stock:
Finished Goods
Work in Progress
Less: Impairment of Inventory (Refer note 33(b))
Add: Foreign exchange translation
Add: Finished Goods acquired as part of business combination
Closing Stock
Finished Goods
Work in Progress
Sub-total
Add / (Less) : Copper Concentrate (raw material) sold during the year
Total
* Inventories include goods-in-transit
28. EMPLOYEE BENEFITS EXPENSE
Particulars
Salaries and Wages
Share based payments (Refer note 29)
Contributions to provident and other funds (Refer note 30)
Staff welfare expenses
Less: Cost allocated/directly booked in joint ventures
Total
Year ended
March 31, 2019
1,988
929
-
(` in Crore)
Year ended
March 31, 2018
1,676
469
258
143
8
217
119
30
1
183
400
4,018
133
6
211
217
10
0
145
80
3,205
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
626
3,012
3,638
-
(9)
205
1,438
2,527
3,965
(131)
203
72
756
3,298
4,054
(35)
28
41
626
3,012
3,638
450
-
450
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
3,121
2,582
118
180
245
(641)
3,023
118
157
227
(588)
2,496
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 405
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 29. SHARE BASED PAYMENTS
The Company offers equity based and cash based option plans to its employees, officers and directors through the Company’s
stock option plan introduced in 2016, Cairn India’s stock option plan now administered by the Company pursuant to merger with
the Company and Vedanta Resources Limited (earlier known as 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 ‘VRL 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 tenure based, business performance (EBIDTA) based and market 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 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, 2019 is presented below:
Exercise Period
Options
outstanding
April 1, 2017
Options
granted during
the year
December 15, 2019 - June 14, 2020
70,98,602
September 1, 2020 - February 28, 2021
96,17,340
October 16, 2020 - April 15, 2021
November 1, 2020 - April 30, 2021
November 1, 2021 - April 30, 2022
November 1, 2021 - April 30, 2022
(Cash settled)
11,570
28,740
Options lapsed
during the
year owing to
performance
conditions
-
Options lapsed
during the year
5,90,376
8,48,381
4,94,566
-
-
444
1,102
-
-
-
-
1,37,93,980
2,27,780
10,76,120
28,460
-
-
Options
exercised
during the year
Options
outstanding
March 31, 2018
-
-
-
-
65,08,226
82,74,393
11,126
27,638
- 1,35,66,200
-
10,47,660
Year of
Grant
2017
2018
2018
2018
2019
2019
1,67,56,252 1,48,70,100
16,94,997
4,96,112
- 2,94,35,243
The details of share options for the year ended March 31, 2018 is presented below:
Exercise Period
Options
outstanding
April 1, 2018
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, 2019
December 15, 2019 - June 14, 2020
78,03,400
-
7,04,798
September 1, 2020 - February 28, 2021
- 1,00,48,650
4,31,310
October 16, 2020 - April 15, 2021
November 1, 2020 - April 30, 2021
-
-
11,570
28,740
-
-
78,03,400 1,00,88,960
11,36,108
-
-
-
-
-
- 70,98,602
- 96,17,340
-
-
11,570
28,740
- 1,67,56,252
Year of
Grant
2017
2018
2018
2018
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 of 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 Company’s TSR performance. All options are assumed to be exercised immediately
after vesting, as the excercise period is 6 months.
406
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
The assumptions used in the calculations of the charge in respect of the ESOS options granted during the year ended March 31,
2019 and March 31, 2018 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
Year ended March 31, 2019
Year ended March 31, 2018
ESOS November 2018
10,76,120 (cash
settled) / 1,37,93,980
(equity settled)
ESOS September, October
and November 2017
1,00,88,960
₹ ` 1
₹ ` 195.00
3 years
44.3%
3 years
6.50%
7.70%
10%p.a.
₹ ` 1
₹ ` 308.90
3 years
48%
3 years
3.70%
6.50%
10%p.a.
Fair value per option granted (Tenure & EBIDTA based/Performance based)
₹ ` 159.9/ ` 96.3
₹ ` 275.3/ `161.1
The Company recognized total expenses of ` 82 Crore (March 31, 2018: ` 47 Crore) related to equity settled share-based
payment transactions in the year ended March 31, 2019. The total expense recognised on account of cash settled share based
plan during the year ended March 31, 2019 is ` 1 Crore (March 31, 2018: Nil) and the carrying value of cash settled share based
compensation liability as at March 31, 2019 is ` 1 Crore (March 31, 2018: Nil).
Employee stock option plans of erstwhile Cairn India Limited:
The Company has provided CIESOP share based payment scheme to its employees.
CIESOP plan
There are no specific vesting conditions under CIESOP plan other than completion of the minimum service period of 3 years from
the date of grant. Phantom options are exercisable proportionate to the period of service rendered by the employee subject to
completion of one year. The exercise period is 7 years from the vesting date.
Details of employees stock option plans is presented below:
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, 2019
Year ended March 31, 2018
Number of
options
Weighted average
exercise price in `
Number of
options
Weighted average
exercise price in `
71,30,625
Nil
90,896
2,35,169
3,27,501
64,77,059
64,77,059
275.5
NA
187.0
189.0
287.2
279.2
279.2
89,62,666
264.3
Nil
Nil
15,92,759
2,39,282
71,30,625
71,30,625
NA
NA
213.8
268.2
275.5
275.5
Weighted average share price at the date of exercise of stock options is `232.7 (March 31, 2018: `324.6)
Scheme
The details of exercise price for stock options outstanding as at March 31, 2019 are:
CIESOP Plan
The details of exercise price for stock options outstanding as at March 31, 2018 are:
CIESOP Plan
Range of
exercise
price in `
Weighted average
remaining
contractual life of
options (in years)
Weighted
average exercise
price in `
200.05-291.25
187-291.25
NA
NA
279.2
275.5
Employee share option plan of Vedanta Resources Limited (earlier known as 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 Vedanta Resources Limited is both tenure and
performance based share schemes. The options are indexed to and settled by Parent’s shares (Vedanta Resources Limited 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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 407
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
During the current year, through an open offer all the
outstanding equity settled options were bought back by
Vedanta Resources Limited’s parent, Volcan Investments
Limited. On account of delisting of Vedanta Resources
Limited, the cash based options were also early settled.
The accelerated charge on account of early settlement of both
the equity settled and cash settled options was recognised in
the Consolidated Statement of Profit and Loss.
the year ended March 31, 2019, the Group has capitalised
` 1 Crore (March 31, 2018 : ` 4 Crore) expense for the year
ended March 31, 2019.
30. EMPLOYEE BENEFIT PLANS
The Group participates in defined contribution and benefit
plans, the assets of which are held (where funded) in
separately administered funds.
Amount recovered by the Parent and recognized by the Group
for the year ended March 31, 2019 is ` 15 Crore (March 31,
2018: ` 53 Crore). The Group considers these amounts as not
material and accordingly has not provided further disclosures.
For defined contribution plans the amount charged to the
consolidated statement of profit and loss is the total amount of
contributions payable in the year.
The Group has awarded certain cash settled share based
options indexed to Parents’ shares (Vedanta Resources
Limited 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, 2019 is ` 21 Crore
(March 31, 2018: ` 22 Crore) and the carrying value of cash
settled share based compensation liability as at March 31,
2019 is ` 34 Crore (March 31, 2018: ` 24 Crore).
Out of the total expense of ` 119 Crore (March 31,2018: ` 122
Crore) pertaining to equity settled and cash settled options for
For defined benefit plans, the cost of providing benefits under
the plans is determined by actuarial valuation separately
each year for each plan using the projected unit credit
method by independent qualified actuaries as at the year
end. Remeasurement gains and losses arising in the year are
recognised in full in other comprehensive income for the year.
i) Defined contribution plans
The Group contributed a total of ` 72 Crore and ` 60 Crore
for the year ended March 31, 2019 and March 31, 2018
respectively to the following defined contribution plans.
Particulars
Employer’s contribution to recognised provident fund and family pension fund
Employer’s contribution to superannuation
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
55
17
72
46
14
60
Indian pension plans
Central recognised provident fund
In accordance with the ‘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 2019 and 2018) 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
year they are incurred.
Family pension fund
The Pension Fund was established in 1995 and is managed by
the Government of India. The employee makes no contribution
to this fund but the employer makes a contribution of 8.33% of
salary each month subject to a specified ceiling per employee.
This is provided for every permanent employee on the payroll.
At the age of superannuation, contributions ceases and the
individual receives a monthly payment based on the level of
contributions through the years, and on their salary scale at
the time they retire, subject to a maximum ceiling of salary
level. The Government funds these payments, thus the
Group has no additional liability beyond the contributions
that it makes, regardless of whether the central fund is in
surplus or deficit.
408
Superannuation
Superannuation, another pension scheme, is applicable
only to executives above certain grade. However, in case of
the oil & gas business (applicable from the second year of
employment) and Iron Ore Segment, the benefit is applicable
to all executives. Vedanta Limited and each relevant Indian
subsidiary holds 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
year 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 compulsory 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 other employees. All employees have an
option to make additional voluntary contributions. The Group
has no further obligations under the scheme beyond its
monthly contributions which are charged to the consolidated
statement of profit and loss in the year they are incurred.
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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%.
Normal retirement age is 60 years and benefit payable is
the member’s fund credit which is equal to all employer and
employee contributions plus interest. The same applies when
an employee resigns from Skorpion Zinc. The Fund provides
disability cover which is equal to the member’s fund credit and
a death cover of two times annual salary in the event of death
before retirement.
The Group has no additional liability beyond the contributions
that it makes. Accordingly, this scheme has been accounted
for on a defined contribution basis and contributions are
charged directly to the consolidated statement of profit and
loss in the year they are incurred.
Black Mountain (Pty) Limited, South Africa Pension and
Provident Funds
Black Mountain Mining (Pty) Ltd has two retirement funds,
both administered by Alexander Forbes, a registered financial
service provider. The purpose of the funds is to provide
retirement and death benefits to all eligible employees.
Group contributes at a fixed percentage of 10.5% for up to
supervisor grade and 15% for others.
Membership of both funds is compulsory for all permanent
employees under the age of 60.
The Group has no additional liability beyond the contributions
that it makes. Accordingly, this scheme has been accounted
for on a defined contribution basis and contributions are
charged directly to the consolidated statement of profit and
loss in the year they are incurred.
ii) Defined benefit plans
(a) Contribution to provident fund trust (the “trusts”) of Iron
ore division, Bharat Aluminium Company Limited (BALCO),
Hindustan Zinc Limited (HZL), Sesa Resources Limited (SRL)
and Sesa Mining Corporation Limited (SMCL)
The provident funds of Iron ore division, BALCO, HZL, SRL
and SMCL are exempted under section 17 of The Employees
Provident 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, 2019 and March 31, 2018.
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 Group contributed a total of ` 68 Crore for the year ended
March 31, 2019 and ` 63 Crore for the year ended March 31,
2018 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 obligation
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
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
2,195
(2,116)
Nil
1,514
(1,469)
Nil
As at
March 31, 2019
As at
March 31, 2018
65.66%
33.09%
1.25%
0.00%
71.10%
28.04%
0.62%
0.24%
(b) Post-Retirement Medical Benefits:
The Group has a scheme of medical benefits for employees at BMM and BALCO subsequent to their retirement on completion
of tenure including retirement on medical grounds and voluntary retirement on contributory basis. The scheme includes
employee’s spouses as well. Based on an actuarial valuation conducted as at year-end, a provision is recognised in full for the
benefit obligation. The obligation relating to post-retirement medical benefits as at March 31, 2019 was ` 65 Crore (March 31,
2018: ` 66 Crore). The obligation under this plan is unfunded. The Group considers these amounts as not material and
accordingly has not provided further disclosures as required by Ind AS 19 ‘Employee benefits’. The current service cost for the
year ending March 31, 2019 of ` 1 Crore (March 31, 2018: ` 1 Crore) has been recognised in consolidated statement of profit
and loss. The remeasurement losses / (gains) and net interest on the obligation of post-retirement medical benefits of ` 1 Crore
loss (March 31, 2018: ` 4 Crore gains) and ` 5 Crore (March 31, 2018: ` 6 Crore) for the year ended March 31, 2019 have been
recognised in other comprehensive income and finance cost respectively.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 409
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
(c) Other Post-employment Benefits:
India - Gratuity plan
In accordance with the Payment of Gratuity Act of 1972, Vedanta Limited and its Indian subsidiaries contribute to a defined
benefit plan (the “Gratuity Plan”) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to
vested employees at retirement, disability or termination of employment being an amount based on the respective employee’s
last drawn salary and the number of years of employment with the Group.
Based on actuarial valuations conducted as at year end using the projected unit credit method, a provision is recognised in full for
the benefit obligation over and above the funds held in the Gratuity Plan. For entities where the plan is unfunded, full provision is
recognised in the consolidated balance sheet.
The iron ore and oil & gas division of Vedanta Limited SRL, SMCL and HZL 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.
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of the Other post-employment benefit Plan obligation
are as follows:
Particulars
Discount rate
Expected rate of increase in compensation level of covered employees
Mortality table
As at
March 31, 2019
As at
March 31, 2018
7.80%
2%-15%
7.70%
2%-15%
IALM (2006-08) IALM (2006-08)
In India, the mortality tables used, assume that a person aged 60 at the end of the balance sheet date has a future life
expectancy of 19 years.
Amount recognised in the consolidated balance sheet consists of:
Fair value of plan assets
Present value of defined benefit obligations
Net liability arising from defined benefit obligation
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
387
(589)
(202)
339
(546)
(207)
Amounts recognised in consolidated statement of profit and loss in respect of Other post-employment benefit plan are as follows:
Particulars
Current service cost
Past service cost (Refer note 33)
Net interest cost
Components of defined benefit costs recognised in consolidated statement of profit and loss
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
39
-
16
55
33
82
10
125
Amounts recognised in other comprehensive income in respect of Other post-employment benefit plan are as follows:
Particulars
Re-measurement of the net defined benefit obligation:-
Actuarial (gains) / losses arising from changes in financial assumptions
Actuarial losses / (gains) arising from experience adjustments
Actuarial losses arising from changes in demographic assumptions
Actuarial losses on plan assets (excluding amounts included in net interest cost)
Components of defined benefit costs recognised in Other comprehensive income
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
(6)
41
2
2
39
2
(6)
-
1
(3)
410
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
The movement of the present value of the Other post-employment benefit plan obligation is as follows:
Particulars
Opening balance
Acquired in business combination
Current service cost
Past service cost
Benefits paid
Interest cost
Actuarial losses / (gains) arising from changes in assumptions
Closing balance
The movement in the fair value of Other post-employment benefit plan assets is as follows:
Particulars
Opening balance
Acquired in business combination
Contributions received
Benefits paid
Re-measurement gain/(loss) arising from return on plan assets
Interest income
Closing balance
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
546
15
39
-
(90)
42
37
589
450
-
33
82
(49)
34
(4)
546
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
339
16
82
(74)
(2)
26
387
322
-
32
(38)
(1)
24
339
The above plan assets have been invested in the qualified insurance policies.
The actual return on plan assets was ` 24 Crore for the year ended March 31, 2019 and ` 23 Crore for the year ended
March 31, 2018.
The weighted average duration of the defined benefit obligation is 14.7 years and 14.6 years as at March 31, 2019 and March 31,
2018 respectively.
The Group expects to contribute ` 57 Crore to the funded defined benefit plans during the year ending March 31, 2020.
Sensitivity analysis for Defined Benefit Plan
Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined benefit
obligation 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)
Increase / (Decrease) in defined
benefit obligation
As at
March 31, 2019
As at
March 31, 2018
(18)
20
20
(17)
(17)
17
15
(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.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 411
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 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 obligation 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
net plan obligation.
Longevity risk / Life expectancy
The present value of the defined benefit plan obligation is
calculated by reference to the best estimate of the mortality
of plan participants both during and at the end of the
employment. An increase in the life expectancy of the plan
participants will increase the plan obligation.
Salary growth risk
The present value of the defined benefit plan obligation
is calculated by reference to the future salaries of plan
participants. An increase in the salary of the plan participants
will increase the plan obligation.
31. 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 (Refer note 23)
Exchange difference regarded as an adjustment to borrowing cost
Less : Capitalisation of finance cost/borrowing cost b (Refer note 6)
Less: Cost allocated/directly booked in joint ventures
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
6,072
334
21
93
3
(834)
(0)
5,689
5,152
177
16
84
32
(349)
(0)
5,112
a) Includes `157 Crore (March 31, 2018 : ` 252 Crore) on redeemable preference shares (including dividend distribution tax).
b) Interest rate of 7.3% was used to determine the amount of general borrowing costs eligible for capitalization in respect of
qualifying asset for the year ended March 31, 2019.
c) Interest expense on Income taxes is ` 17 Crore (March 31, 2018 : ` 5 Crore)
32. OTHER EXPENSES
Particulars
Cess on crude oil
Royalty
Consumption of stores and spare parts
Share of expenses in producing oil and gas blocks
Repairs to Plant and equipment
Repairs to building
Repairs others
Carriage
Mine Expenses
Net loss on foreign currency transactions and translation
Other Selling Expenses
Insurance
Loss on sale/ disposal of fixed asset (net)
Rent
Rates and taxes
Amortisation of prepaid lease charges
Exploration costs written off (Refer note 6)
Directors sitting fees and commission
Bad trade receivables & advances written off
Provision for doubtful advances/ expected credit loss
Miscellaneous expenses
Less: Cost allocated/directly booked in joint ventures
Total
412
Year ended
March 31, 2019
2,971
2,891
2,456
2,299
2,153
203
168
1,568
1,967
809
25
185
68
93
55
9
50
7
33
(33)
4,039
(388)
21,628
(` in Crore)
Year ended
March 31, 2018
2,155
3,051
2,393
1,875
1,845
128
173
1,560
1,499
302
97
150
15
81
50
12
-
5
4
64
3,048
(277)
18,230
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
33. EXCEPTIONAL ITEMS
Particulars
Net 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 loss reclassified
from equity to profit and loss relating to
subsidiaries under liquidation c
Loss on unusable capital work in progress d
Reversal of provision for District mineral fund e
Gratuity - change in limits f
Reversal/ (charge) pursuant to Supreme Court
order/ arbitration order g
Acquisition expenses (Refer note 4(b)) h
Total
Year ended March 31, 2019
Year ended March 31, 2018
Exceptional
items
Tax effect of
Exceptional
items
Exceptional
items after tax
Exceptional
items
Tax effect of
Exceptional
items
Exceptional
items after tax
261
(91)
170
6,907
(2,721)
4,186
(` in Crore)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59
(21)
38
(2,329)
(1,485)
603
-
(1,726)
(1,485)
(251)
295
(82)
(113)
87
(100)
18
40
(164)
195
(64)
(73)
(45)
823
-
320
-
(112)
-
208
(45)
2,897
-
(2,074)
a) During the year, the Group has recognized net impairment
reversal of ` 261 Crore in respect of Oil & Gas Block
KG-ONN-2003/1 (CGU) on booking of commercial reserves
and subsequent commencement of commercial production.
The impairment reversal has been recorded against Oil & Gas
producing facilities. The recoverable amount of the Group’s
share in KG-ONN-2003/1 (CGU) was determined to be ` 208
Crore ($30 million).
The recoverable amount of the KG-ONN-2003/1 CGU was
determined based on the fair value less costs of disposal
approach, a level-3 valuation technique in the fair value
hierarchy, as it more accurately reflects the recoverable
amount based on our view of the assumptions that would be
used by a market participant. This is based on the cash flows
expected to be generated by the projected oil and natural gas
production profiles up to the expected dates of cessation of
production sharing contract (PSC)/cessation of production
from each producing field based on the current estimates of
reserves and risked resources. Reserves assumptions for fair
value less costs of disposal tests consider all reserves that a
market participant would consider when valuing the asset,
which are usually broader in scope than the reserves used
in a value-in-use test. Discounted cash flow analysis used to
calculate fair value less costs of disposal uses assumption for
short-term oil price of US$ 62 per barrel for the year ended
March 31, 2019 and scales upto long-term nominal price of
US$ 65 per barrel by year ended March 31, 2022 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 11.8% derived from the post-tax
weighted average cost of capital. The sensitivities around
change in crude price and discount rate are not material to the
financial statements.
During the year ended March 31, 2018, the Group had
recognized 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$ 2,514 million)
as at March 31, 2018, 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 and scales upto long-term nominal price
of US$ 65 per barrel three years thereafter 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% 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 was relinquished during the previous year.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 413
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
b) During the year ended March 31, 2018, the Group had
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. This impairment, ` 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 had 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, 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.
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, 2018, the Group
had 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 had recognised a
reversal of DMF provision for the period for which DMF levy is
no longer leviable.
f) 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.
g) During the current year, the Company has partly reversed
the provision for interest of ` 59 Crore for dues towards a
vendor pursuant to the Honourable Supreme Court of India
order. A charge of ` 113 Crore in this matter was recognised
pursuant to an unfavourable arbitration order during the
previous year.
h) On December 28, 2017, the Group through its wholly
owned subsidiary, acquired 51.6% equity stake in AvanStrate
Inc. (ASI) (Refer note 4(b)). Acquisition expenses of ` 45
Crore incurred for the transaction has been recognised under
exceptional items.
414
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
34. TAX
(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
Charge in respect of exceptional items
Total Deferred Tax (b)
Distribution tax on dividend from subsidiaries (c)
Net tax expense (a+b+c)
Profit before tax
Effective income tax rate (%)
Tax expense
Particulars
Tax effect of exceptional items
Tax expense- others
Net tax expense
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
2,683
2,828
(6)
-
39
51
2,677
2,918
1,075
(2)
112
1,185
-
3,862
13,560
28%
2,380
92
2,023
4,495
(1,536)
5,877
19,569
30%
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
112
3,750
3,862
2,074
3,803
5,877
(b) A reconciliation of income tax expense/ (credit) applicable to profit/ (loss) before tax at the Indian statutory income tax
rate to recognised income tax expense for the year indicated are as follows.
Given the majority of the Group’s operations are located in India, the reconciliation has been carried out from the Indian statutory
income tax rate.
Particulars
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 33)
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
Charge/(credit) in respect of earlier years
Other permanent differences
Total
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
13,560
34.944%
4,739
241
(192)
-
(808)
(43)
-
(73)
-
(206)
(8)
212
19,569
34.608%
6,772
153
(241)
514
(996)
370
(1,536)
271
89
(76)
131
426
3,862
5,877
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 415
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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’).
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).
The Group has such types of undertakings at Haridwar and
Pantnagar, which are part of Hindustan Zinc Limited (Zinc
India). FY 2018 was the last year of eligibility for deduction for
Haridwar unit. In the current year, Pantnagar is the only unit
eligible for deduction at 30% of taxable profit.
The location based exemption: SEZ Operations
In order to boost industrial development and exports, provided
certain conditions are met, profits of undertaking located in
Special Economic Zone (‘SEZ’) may benefit from 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).
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
` 808 Crore for the year ended March 31, 2019 (March 31,
2018: ` 996 Crore).
(c) Deferred tax assets/liabilities
The Group has accrued significant amounts of deferred
tax. The majority of the deferred tax liability represents
accelerated tax relief for the depreciation of property, plant
and equipment, the depreciation of mining reserves and the
fair value uplifts created on acquisitions, net of losses carried
forward by 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 31 March 2019
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
Dividend distribution tax
Other temporary differences
Total
Opening
balance as at
April 01, 2018
Charged /
(credited) to
statement of
profit or loss
Charged /
(credited)
to other
comprehensive
income
Charged /
(credited) to
equity
Deferred tax
on Acquisition
through
business
combination
Exchange
difference
transferred
to translation
of foreign
operation
(` in Crore)
Closing
balance as
at March 31,
2019
14,032
1,712
(42)
(97)
(78)
815
(11,084)
(3,462)
(338)
(462)
(716)
2
(2)
42
(126)
727
(1,098)
-
(72)
1,185
-
-
(25)
(9)
(17)
37
-
-
(12)
(26)
-
-
-
-
-
-
-
338
-
338
-
-
-
-
-
-
-
-
-
-
214
15,958
-
4
-
8
(40)
(120)
(45)
680
(1)
(10,321)
-
-
3
228
(4,560)
-
(543)
1,009
416
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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
Dividend distribution tax*
Other temporary differences
Total
Opening balance
as at April 01,
2017
10,535
(48)
(81)
(34)
1,120
(12,381)
(3,899)
-
(620)
(5,408)
Charged /
(credited) to
statement profit
or loss
3,386
6
(9)
(9)
(622)
1,295
437
-
11
4,495
Charged /
(credited)
to other
comprehensive
income
Other
Adjustments*
-
-
(3)
(35)
(2)
(4)
-
-
7
(37)
-
-
-
-
-
-
-
(338)
-
(338)
Deferred tax
on Acquisition
through
business
combination
(Refer Note
4(b))
(21)
-
-
-
295
-
-
-
129
403
Exchange
difference
transferred
to translation
of foreign
operation
132
-
(4)
-
24
6
-
-
11
169
(` in Crore)
Closing
balance as
at March 31,
2018
14,032
(42)
(97)
(78)
815
(11,084)
(3,462)
(338)
(462)
(716)
* represents dividend distribution tax paid by a subsidiary for which credit has been availed.
Deferred tax assets and liabilities have been offset where they arise in the same taxing jurisdiction with a legal right to offset but
not otherwise. Accordingly the net deferred tax (assets)/liability has been disclosed in the Balance Sheet as follows :
Particulars
Deferred tax assets
Deferred tax liabilities
Net Deferred tax (assets) / Liabilities
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
(3,475)
4,484
1,009
(4,934)
4,218
(716)
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.
Unused tax losses / unused tax credit for which no deferred tax asset has been recognized amount to ` 12,114 Crore and
` 3,500 Crore as at March 31, 2019 and March 31, 2018 respectively.
As at March 31, 2019
Unused tax losses/ unused tax credit*
Unutilised business losses
Unabsorbed depreciation
Unutilised R&D credit
Total
Within one
year
128
-
-
128
Greater than
one year, less
than five years
1,094
-
-
1,094
Greater than
five years
628
-
-
628
No expiry
date
1,527
8,728
9
10,264
(` in Crore)
Total
3,377
8,728
9
12,114
*Includes ` 1,799 crore and ` 6,741 crore of business losses and unabsorbed depreciation respectively pursuant to acquisition of ESL (Refer Note 4(a))
As at March 31, 2018
Unused tax losses/ unused tax credit
Unutilised business losses
Unabsorbed depreciation
Capital losses
Unutilised R&D credit
Total
Within one
year
-
-
128
-
128
Greater than
one year, less
than five years
-
-
142
-
142
Greater than
five years
-
-
-
-
-
No expiry
date
1,201
2,020
-
9
3,230
(` in Crore)
Total
1,201
2.020
270
9
3,500
No deferred tax assets has been recognised on these unused tax losses/ unused tax credit as there is no evidence that sufficient
taxable profit will be available in future against which these can be utilised by the respective entities.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 417
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Additionally, the Group has not recognised MAT credit for one of its components, details of which are as under:
Year of Expiry
2022
2023
2024
2025
2026
2027
2028
2029
Total
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
104
14
52
52
103
63
8
4
400
104
14
52
52
103
63
8
4
400
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 ` 32,485 crore and ` 31,488 crore
as at March 31, 2019 and March 31, 2018 respectively.
(d) Non- current tax assets
Non- current tax assets of ` 3,484 crore (March 31, 2018: ` 3,389 crore) mainly represents income tax receivable from Indian tax
authorities by Vedanta Limited relating to the refund arising consequent to the Scheme of Amalgamation & Arrangement made
effective in August 2013 pursuant to approval by the jurisdiction High Court and receivables relating to matters in tax disputes in
Group companies including tax holiday claim.
35. EARNINGS PER EQUITY SHARE (EPS)
Particulars
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
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 (`)
A
B
C
D
A / C
A / D
B / C
B / D
(` in Crore except otherwise stated)
Year ended
March 31, 2019
Year ended March
31, 2018
7,065
10,342
6,857
9,561
370.55
365.41
1.59
372.14
19.07
18.98
18.50
18.43
1/-
0.77
366.18
28.30
28.24
26.17
26.11
1/-
418
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
36. DISTRIBUTIONS MADE AND PROPOSED
Particulars
Amounts recognised as distributions to equity share holders:
Equity dividend on ordinary shares:
Interim dividend for the year : (March 31, 2019 : ` 17.00/- and ` 1.85/- per share, March 31, 2018 : ₹
21.20/- per share) ab
Dividend distribution tax (DDT) on above
Preference dividend on redeemable preference shares:
Preference dividend for the year : 7.5% p.a. (March 31, 2018 : 7.5% p.a.) c
Dividend distribution tax on preference dividend
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
7,005
7,881
1,437
8,442
130
27
157
1,605
9,486
209
43
252
a) Two interim dividends of ` 17.00 and ` 1.85 per share were declared during the current year ended March 31, 2019.
This includes interim dividend of ` 17.00 per share amounting to ` 26 Crore and dividend distribution tax of ` 5 Crore payable on
1,49,98,802 equity shares held by Vedanta Limited through ESOP trust for its stock options. (Refer note 16).
b) An interim dividend of ` 21.20 per share was declared during the previous year ended March 31, 2018. This includes dividend
of ` 20 Crore and dividend distribution tax of ` 4 Crore payable on 92,33,871 equity shares held by Vedanta Limited through
ESOP trust for its stock options. (Refer note 16)
c) Dividend @ 7.5% p.a. on the redeemable preference shares of face value of ` 10/- per preference share for the period from
April 1, 2018 to October 27, 2018 and April 27, 2017 to March 31, 2018, as per their terms of issuance was declared during the
year ended March 31, 2019 and March 31, 2018 respectively. The same has been accounted for as interest cost and has been
recorded in the Consolidated Statement of Profit and Loss. These preference shares were redeemed, along with dividend on
October 26, 2018. (Refer note 16)
37. COMMITMENTS, CONTINGENCIES AND GUARANTEES
A) 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.
a) Estimated amount of contracts remaining to be executed on capital accounts and not provided for:
Particulars
Oil & Gas sector
Cairn India
Aluminium sector
Lanjigarh Refinery (Phase II)
Jharsuguda 1.25 MTPA smelter
Zinc sector
Zinc India (mines expansion and smelter)
Gamsberg mining & milling project
Copper sector
Tuticorin Smelter 400 KTPA*
Others
Total
*currently contracts are under suspension under the force majeure clause as per the contract
b) Commitments related to the minimum work programme (Other than capital commitment):
Particulars
Oil & Gas sector
Cairn India (OALP - New Oil and Gas blocks)
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
5,510
4,304
1,443
460
1,964
183
2,794
1,333
1,335
491
1,984
1,057
2,758
1,056
13,687
12,985
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
3,811
-
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 419
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
c) Other Commitments
(i) 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.
(ii) 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.
B) Guarantees
The aggregate amount of indemnities and other guarantees
on which the Group does not expect any material losses, was ₹
7,745 Crore (March 31, 2018: ` 2,703 Crore).
The Group has given guarantees in the normal course of
business as stated below:
a) Guarantees and bonds advanced to the customs authorities
in India of ` 676 Crore relating to the export and payment of
import duties on purchases of raw material and capital goods
(March 31, 2018: ` 698 Crore).
b) Guarantees issued for Group’s share of minimum work
programme commitments of ` 2,367 Crore (March 31,
2018: ` 170 Crore).
c) Guarantee issued against liabilities for structured investment
worth ` 1,916 Crore. Liability of ` 2,070 Crore pertaining to
above mentioned structured investment has been shown
under Other Financial Liabilities (refer note 21)
d) Guarantees of ` 543 Crore issued under bid bond
(March 31, 2018:` 12 Crore).
e) Bank guarantees of ` 115 Crore (March 31, 2018: ` 115
Crore) has been provided by the Group on behalf of Volcan
Investments Limited to Income tax department, India as a
collateral in respect of certain tax disputes.
f) Other guarantees worth ` 2,128 Crore (March 31, 2018:
` 1,708 Crore) issued for securing supplies of materials
and services, in lieu of advances received from customers,
litigation, for provisional valuation of custom duty and also to
various agencies, suppliers and government authorities for
various purposes. The Group does not anticipate any liability
on these guarantees.
C) Export Obligations
The Indian entities of the Group have export obligations of ₹
` 3,234 Crore (March 31, 2018: ` 12,385 Crore) on account of
concessional rates of import duty paid on capital goods under
the Export Promotion Capital Goods Scheme and under the
Advance Licence Scheme for the import of raw material laid
down by the Government of India.
In the event of the Group’s inability to meet its obligations,
the Group’s liability would be ` 433 Crore (March 31, 2018:
` 1,101 Crore) reduced in proportion to actual exports, plus
applicable interest.
The Group has given bonds of ` 1,492 Crore (March 31,
2018: ` 1,472 Crore) to custom authorities against these
export obligations.
D) Contingent Liabilities
a) Hindustan Zinc Limited : 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, 2019 (March 31, 2018: ` 334 Crore).
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 the matter is likely to be listed now for hearing after
completion of pleadings by the Central Government.
b) Vedanta Limited: Income tax
In March 2014, Vedanta Limited (notice was served on Cairn
India Limited which subsequently merged with Vedanta
Limited, accordingly now referred to as Vedanta Limited)
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. The 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 Vedanta Limited,
in the financial year 2006–2007, on which tax should have
been withheld by the Company. Pursuant to this various replies
were filed with the Tax Authorities. After several hearings, the
Income Tax Authority, in March 2015, issued an order holding
the Company as ‘assessee in default’ and raised a demand
totalling ` 20,495 Crore (including interest of ` 10,247 Crore).
The Company 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 the Company. The Company has challenged the
Commissioner of Income Tax’s (Appeals) order before the
Income Tax Appellate Tribunal (ITAT).
The Company 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 pending for adjudication before the Honourable
Delhi High Court.
Separately CUHL, on whom the primary liability of tax lies,
had received an Order from the ITAT in the financial year
2016-17 holding that the transaction is taxable in view of
the clarification made in the Act but also acknowledged that
being a retrospective transaction, interest would not be levied.
Hence affirming a demand of ` 10,247 Crore excluding the
interest portion that had previously been claimed. The tax
department has appealed this order before the Delhi High
Court. As a result of the above order from ITAT, the Group
considers the risk in respect of the interest portion of claim to
be remote. Further, as per the recent recovery notice dated
October 12, 2018 received from the Tax Recovery Officer
(TRO) appointed for CUHL, tax demand of CUHL of approx.
` 4,996 Crore along with interest is outstanding. Further, in
420
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS the said notice, tax department had also instructed to remit
the preference shares redemption amount including dividend
payable thereon to the TRO. Accordingly, amount aggregating
to ` 607 Crore has been paid to the TRO on October 26, 2018
thus reducing the liability to ` 4,389 Crore. Vedanta has also
paid interim dividend for FY 2018-19 of ` 4 Crore to the TRO.
Accordingly, the Group has revised the contingent liability to ₹
` 4,385 Crore (March 31, 2018: ` 9,139 Crore).
In the event, the case is finally decided against the Company,
the demand payable along with interest as per the above
mentioned order would be ` 20,495 Crore, of which only
` 4,385 Crore is considered as possible. Separately, but in
connection with this litigation, Vedanta Resources Limited
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 passed a
favourable order on jurisdiction and now the matter is being
heard on merits- the hearing started on April 29, 2019 and
is still continuing. The Government of India has challenged
the jurisdiction order of Arbitration Tribunal before the High
Court of Singapore.
c) Ravva Joint Operations arbitration proceedings
ONGC Carry
The Ravva Production Sharing Contract (PSC) obliges the
contractor parties to pay a proportionate share of ONGC’s
exploration, development, production and contract costs in
consideration for ONGC’s payment of costs related to the
construction and other activities it conducted in Ravva prior
to the effective date of the Ravva PSC (the ONGC Carry).
The question as to how the ONGC Carry is to be recovered
and calculated, along with other issues, was submitted to
an International Arbitration Tribunal in August 2002 which
rendered a decision on the ONGC Carry in favour of the
contractor parties (including Vedanta Limited (Cairn India
Limited which subsequently merged with Vedanta Limited,
accordingly now referred to as Vedanta Limited)) whereas
four other issues were decided in favour of Government of
India (GOI) in October 2004 (Partial Award). The GOI then
proceeded to challenge the ONGC Carry decision before
the Malaysian courts, as Kuala Lumpur was the seat of the
arbitration. The Federal Court of Malaysia upheld the Partial
Award. As the Partial Award did not quantify the sums,
therefore, contractor parties approached the same Arbitration
Tribunal to pass a Final Award in the subject matter since it
had retained the jurisdiction to do so. The Arbitral Tribunal was
reconstituted and the Final Award was passed in October 2016
in Vedanta Limited’s favour. GOI’s challenge of the Final
Award has been dismissed by the Malaysian High Court and
the next appellate court in Malaysia i.e. Malaysian Court of
Appeal. GOI then filed an appeal at Federal Court of Malaysia.
The matter was heard on February 28, 2019 and the Federal
Court dismissed GOI’s leave to appeal. The Company has also
filed for the enforcement of the Partial Award and Final Award
with Delhi High Court.
referred to as Vedanta Limited) share will be ` 201 Crore (US$
29 million) plus interest. Joint venture partners initiated the
arbitration proceedings and Arbitration Tribunal published the
Award allowing claimants (including the Company) to recover
the development costs spent to the tune of ` 1,923 Crore
(US$ 278 million) and disallowed over run o ` 154 Crore (US$
22 million) spent in respect of BDC along with 50% legal costs.
The High Court of Kuala Lumpur as well as Court of Appeal
dismissed GOI’s application of setting aside the part of the
Award. GOI challenge to the same before the Federal Court of
Malasia was also dismissed by the Federal Court on May 17,
2016. The Company has filed an application for enforcement
of award before Delhi High Court.
In connection with the above two matters, the Company
has received an order dated October 22, 2018 from the
GOI directing oil marketing companies (OMCs) who are the
offtakers for Ravva to divert the sale proceeds to Government’s
account. GOI alleges that the Ravva Joint Venture has short
paid profit petroleum of ` 2,172 Crore (US$ 314 million)
(the Company share approximately - ` 643 Crore (US$ 93
million)) on account of the two disputed issues of ONGC
Carry and BDC matters. Against an interim application, filed
by the Company and other joint venture partner, seeking stay
of such action from GOI, before the Delhi High Court, where
enforcement petitions for both matters are pending, the Court
directed the OMCs to deposit above sums to the Court for
both BDC and ONGC Carry matters. However, the Company
(and other joint venture partner) has been given the liberty
to seek withdrawal of the proportionate amounts (fallen due
as of the date of Court order) from the Court upon furnishing
a bank guarantee (BG) of commensurate value. The interim
application is pending adjudication.
While the Company does not believe the GOI will be
successful in its challenge, if the Arbitral Awards in above
matters are reversed and such reversals are binding, the
Company would be liable for approximately ` 643 Crore (US$
93 million) plus interest (March 31, 2018: ` 605 Crore (US$ 93
million) plus interest).
d) Proceedings related to the imposition of entry tax
Vedanta Limited and other Group companies i.e. Bharat
Aluminium Company Limited (BALCO) and Hindustan Zinc
Limited (HZL) challenged the constitutional validity of the local
statutes and related notifications in the states of Chhattisgarh,
Odisha and Rajasthan pertaining to the levy of entry tax on the
entry of goods brought into the respective states from outside.
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.
Base Development Cost
Ravva joint operations had received a claim from the Ministry
of Petroleum and Natural Gas, Government of India (GOI)
for the period from 2000-2005 for ` 892 Crore (US$ 129
million) for an alleged underpayment of profit petroleum (by
recovering higher Base Development Costs (“BDC”) against
the cap imposed in the PSC) to the Government of India (GOI),
out of which, Vedanta Limited’s (Cairn India Limited which
subsequently merged with Vedanta Limited, accordingly now
Following the order of the nine judge bench, the regular bench
of the Supreme Court proceeded with hearing the matters.
The regular bench remanded the entry tax matters relating to
the issue of discrimination against domestic goods bought
from other States to the respective High Courts for final
determination but retained the issue of jurisdiction for levy on
imported goods, for determination by the regular bench of the
Supreme Court. Following the order of the Supreme Court, the
Group filed writ petitions in respective High Courts.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 421
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT 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 judgment, imported goods will rank
pari passu with domestic goods for the purpose of levy of
Entry tax. Vedanta Limited and its subsidiaries have amended
their appeals (writ petitions) in Odisha and Chhattisgarh to
include imported goods as well. With respect to Rajasthan, the
State Government has filed a counter petition in the Rajasthan
High Court, whereby it has admitted that it does not intend to
levy the entry tax on imported goods.
The issue pertaining to the levy of entry tax on the movement
of goods into a Special Economic Zone (SEZ) remains pending
before the Odisha High Court. The Group has challenged the
levy of entry tax on any movement of goods into SEZ based
on the definition of ‘local area’ under the Odisha Entry Tax Act
which is very clear and does not include a SEZ. In addition,
the Government of Odisha further through its SEZ Policy
2015 and the operational guidelines for administration of this
policy dated August 22, 2016, exempted the entry tax levy on
SEZ operations.
The total claims against Vedanta Limited and its subsidiaries
are ` 1,316 Crore (March 31, 2018: ` 1,255 Crore) net of
provisions made.
e) 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. BALCO 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 the Supreme Court has also directed
the State of Chhattisgarh to raise the bills but no coercive
action be taken for recovery for the same. Final argument in
this matter started before the Supreme Court. In case the
Supreme Court overturns the decision of the High Court,
BALCO would be liable to pay an additional amount of ` 750
Crore (March 31, 2018: ` 655 Crore) and the Group may have
to bear a charge of ` 785 Crore (March 31, 2018: ` 690 Crore).
f) 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 ` 692 Crore (US$ 100 million) for a work
programme including 3D and 2D seismic studies and at least
one exploration well. The Group has spent ` 264 Crore (US$
38 million) towards exploration expenditure and a minimum
carry of ` 428 Crore (US$ 62 million) (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 judgments. The Group had provided
for the requisite damages as applicable under the South
African Regulations.
During financial year 2018-19, Group has received letter from
PASA (Petroleum Agency SA) that exploration right has lapsed
through effluxion of time, in line with past judicial precedents
and asked to submit a closure application. The Group
along with Petro SA has filed the closure application on
September 19, 2018. Pending disposal of Group’s application
the obligation for the aforesaid carry cost of ` 428 Crore (US$
62 million) (March 31, 2018: ` 404 Crore (US$ 62 million)) has
been assessed as possible and disclosed as a contingency.
g) Miscellaneous disputes- Income tax
The Group is involved in various tax disputes amounting to
` 7,390 Crore (March 31, 2018: ` 6,561 Crore) relating to
income tax for the periods for which initial assessments have
been completed. 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 of the Income
Tax Act and interest thereon which are pending at various
appellate levels. There are similar matters pending initial
assessment by the tax authorities for subsequent years and
additional demands, if any, can be determined only once such
assessments are completed.
The Group believes that these disallowances are not tenable
and accordingly no provision is considered necessary.
h) 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 total ₹
` 3,691 Crore (March 31, 2018: ` 3,496 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, 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 flows or the financial position of the Group.
422
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS c) 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. There are no
restrictions imposed by lease arrangements and there are no sub-leases. There are no contingent rents. The total of the future
minimum lease payments under non-cancellable leases are as under:
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, 2019
Year ended
March 31, 2018
14
20
0
34
9
5
1
15
Lease payments recognized as expenses on non-cancellable lease during the year is ` 16 Crore (March 31, 2018: ` 4 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 and has included the same under revenue from operations. Refer Note 25 (A).
38. RELATED PARTY DISCLOSURES
List of related parties and relationships
A) Entities controlling the Company (Holding Companies)
C) Post retirement benefit plan
Volcan Investments Limited (Volcan)
Volcan Investments Cyprus Limited
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 Limited (formerly 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 Power Transmission limited
Sterlite Technologies Limited
Sterlite Power Grid Ventures Limited
BALCO Employees Provident Fund Trust
HZL Employee Group Gratuity Trust
HZL Superannuation Trust
Hindustan Zinc Ltd Employees Contributory Provident
Fund Trust
Sesa Group Employees Gratuity Fund and Sesa Group
Executives Gratuity Fund
Sesa Group Employees Provident Fund
Sesa Group Executives Superannuation Scheme Fund
Sesa Mining Corporation Limited Employees Gratuity Fund
Sesa Mining Corporation Limited Employees Provident
Fund Trust
Sesa Resources Limited Employees Gratuity Fund
Sesa Resources Limited and Sesa Mining Corporation
Limited Employees Superannuation Fund
Sesa Resources Limited Employees Provident Fund Trust
D) Associates and Joint Ventures (Refer note: 40)
E) Others (with whom transactions have taken place)
Cairn Foundation
India Grid trust
Janhit Electoral Trust
Sesa Community Development Foundation
Runaya Refinery LLP
Vedanta Foundation
Vedanta Medical Research Foundation
Ultimate Controlling party
As at March 31, 2019, the Group is majorly owned by Twin Star Holdings Limited, Finsider International Company Limited,
Westglobe Limited and Welter Trading Limited which are in turn wholly-owned subsidiaries of Vedanta Resources Limited
(formerly Vedanta Resources Plc) (Intermediate Holding Company). The ultimate controlling party of the Group is Volcan (Volcan
Investments Limited and its wholly owned subsidiary Volcan Investments Cyprus Limited), which is controlled by the Chairman
Emeritus, Mr. Anil Agarwal and persons related to him. Volcan Investments Limited, Volcan Investments Cyprus Limited, Twin Star
Holdings Limited, Finsider International Company Limited, Westglobe Limited and Welter Trading Limited do not produce Group
financial statements.
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 423
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
F) The Group enters into transactions in the normal course of business with its related parties, including its parent Vedanta
Resources Limited (formerly Vedanta Resources Plc), and the companies over which it has significant influence. A summary of
significant related party transactions for the year ended March 31, 2019 and 2018 are noted below.
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 Limited (formerly Vedanta Resources Plc)
Konkola Copper Mines Plc
Twin Star Holdings Limited
Sterlite Iron and Steel Company Limited
Sterlite Power Transmission Limited
b)
Outsourcing service fees
Vedanta Resources Limited (formerly Vedanta Resources Plc)
c)
Dividend income
Sterlite Technologies Limited
India Grid Trust
d) Other non-operating income
Sterlite Power Transmission Limited
Expenditure and Other Transactions :
i)
Purchases of goods/services :
Konkola Copper Mines Plc
Runaya Refinery LLP
Sterlite Technologies Limited
Sterlite Power Transmission Limited
ii)
Stock option expenses/ (recovery)
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Konkola Copper Mines Plc
iii) Management fees and Brand Fees charged
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Sterlite Technologies Limited.
iv)
(Recovery of)/Reimbursement to / for other expenses
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Sterlite Power Grid Ventures Limited
Sterlite Power Transmission Limited
Sterlite Technologies Limited
Konkola Copper Mines Plc
Volcan Investments Limited
424
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
-
0
918
918
2
69
1,129
1,200
27
6
2
0
4
39
3
3
1
15
16
-
-
402
1
-
2
405
15
(0)
15
325
13
338
1
0
0
0
(3)
(1)
(3)
28
4
1
1
1
35
3
3
0
8
8
0
0
657
-
1
13
671
53
(0)
53
345
-
345
17
0
-
-
(5)
(2)
10
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS Particulars
v)
Corporate social responsibility expenditure/donation
Vedanta Foundation
Vedanta Medical Research Foundation
Sesa Community Development Foundation
Cairn Foundation
Janhit Electoral Trust
vi)
Dividend paid
Twin Star Holdings Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Particulars
Balances as at year end
i)
Trade receivables
Sterlite Technologies Limited
Sterlite Power Transmission Limited
Konkola Copper Mines Plc
Vedanta Resources Limited (formerly Vedanta Resources Plc)
ii)
Loans
Roshskor Township (Proprietary) Limited
Sterlite Iron And Steel Company Limited
Twin Star Holdings Limited
iii) Other receivables and advances
Konkola Copper Mines Plc
Sterlite Iron And Steel Company Limited
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Sterlite Power Grid Ventures Limited
Sterlite Power Transmission limited
Goa Maritime Private Limited
Twin Star Holdings Limited
Volcan Investments Limited
Vedanta Foundation
iv)
Trade payables
Konkola Copper Mines Plc
Sterlite Power Transmission Limited
Sterlite Technologies Limited
v)
Other payables
Volcan Investments Limited (refer note 38(f))
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Cairn Foundation
Hindustan Zinc Ltd Employees Contributory Provident Fund Trust
HZL Employee group Gratuity Trust
Sesa Group Employees Gratuity Fund and Sesa Group Executives Gratuity Fund
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
5
100
7
19
3
134
2,600
757
84
72
3,513
0
84
5
16
-
105
2,924
851
94
81
3,950
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
-
3
0
7
10
5
5
69
79
550
13
35
0
0
1
5
1
-
4
5
1
7
17
7
5
65
77
323
13
63
0
0
1
3
4
5
605
412
10
2
13
25
2,070
86
8
10
54
5
38
3
-
41
-
21
11
9
62
4
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 425
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT Particulars
Sesa Resources Limited Employees Gratuity Fund
Sesa Mining Corporation Limited Employees Gratuity
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
Sterlite Power Transmission limited
vi)
Investments
Vedanta Resources Limited (Investment in bonds included interest accrued)
India Grid Trust (Investment in units)
Fair value of structured investments (refer note 38(f))
vii)
Financial guarantees given
Vedanta Medical Research Foundation
viii) Banking Limits assigned/utilised/renewed to/for group companies
Volcan Investments Limited*
(` in Crore)
As at
March 31, 2019
As at
March 31, 2018
0
1
2
5
0
0
0
0
0
4
2,245
223
106
4,772
5,101
51
51
115
1
1
2
5
0
0
0
0
0
-
116
412
122
-
534
34
34
115
* Bank guarantee given by Company 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
ix) Commission and consultancy fees payable to KMP and their relatives
5
5
Particulars
Transactions during the year
i)
Loans given / (repayment thereof)
Roshskor Township (Proprietary) Limited
Sterlite Iron And Steel Company Limited
ii)
Financial Guarantees (taken)/given during the year
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Vedanta Medical Research Foundation
iii)
Financial Guarantees relinquished during the year
Vedanta Resources Limited (formerly Vedanta Resources Plc)
Vedanta Medical Research Foundation
iv)
a)
Investments
Investment made/(redeemed) during the year
Gaurav Overseas Private Limited
Madanpur South Coal Company Limited
Vedanta Resources Limited (Investment in bonds)*
India Grid Trust (Investment in units)
*includes premium on redemption of bonds of ` NIL and ` 5 Crore for March 31, 2019 and March 31,2018 respectively.
b)
Purchased from
Volcan Investments Limited (refer note 38(f))
426
(` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
(1)
0
(1)
(874)
69
(805)
874
52
926
-
-
(199)
-
(199)
3,812
3,613
-
0
0
-
34
34
35,015
-
35,015
0
(0)
(112)
(0)
(112)
-
(112)
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS (` in Crore)
Year ended
March 31, 2019
Year ended
March 31, 2018
41
1
5
47
Particulars
v)
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
vi)
Dividend to Key management personnel
vii) Commission/Sitting Fees
To independent directors
To other KMP
viii) Details of transactions with relatives of Key management personnel
Commission to relatives of KMP
Remuneration to relatives of KMP
Dividend to relatives of KMP
ix)
Details of transactions with post retirement employee benefit trust/fund
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
0
4
1
5
0
15
0
15
14
35
0
1
5
12
0
0
0
3
2
0
72
33
2
6
41
0
4
0
4
0
7
0
7
13
30
1
1
5
16
1
0
0
2
2
0
71
a) Cairn PSC guarantee to Government
Vedanta Resources Limited (formerly Vedanta Resources Plc)
as a parent company has provided 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.
b) Cairn Investment in Vedanta Resources Limited
(formerly Vedanta Resources Plc) Bonds
Cairn India Holdings Limited had invested ` 211 Crore
(US$ 30.5 million) and ` 384 Crore (US$ 59 million) as at
March 31, 2019 and March 31, 2018 in bonds issued by
Vedanta Resources Limited (formerly Vedanta Resources Plc),
which have maturities ranging from June 2021 to May 2023
at coupon ranging from 7.13% to 8.25% p.a. The carrying
value of these bonds including interest accrued are ` 223
Crore and ` 412 Crore as at March 31, 2019 and March 31,
2018 respectively.
c) 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$10 million) at an interest rate of 2.1%.
The loan is unsecured and the outstanding balance under
the facility including interest accrued at March 31, 2019 and
March 31, 2018 is ` 74 Crore and ` 68 Crore respectively.
d) Loans from holding companies
During the year, the Group received a fresh loan from Twinstar
Holdings Limited for a facility amount of ` 140 Crore
(US$ 20 million) at an interest rate of 2.25% p.a. repayable in
February 2019. An amount of ` 70 Crore (US$ 10 million)
has been drawn under this facility during the year and an
amount of ` 70 Crore (US$ 10 million) has been repaid.
Further, the maturity of this loan has been further extended to
February 2020. As at 31 March 2019, the amount outstanding
under this facility was ` 0 Crore (US$ 40,000) (2018: ` Nil) and
accrued interest of ` 0 Crore (US$ 5,033) (2018: ` Nil)
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 427
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT e) Loans to fellow subsidiaries
During the year ended March 31, 2019, the 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, 2019 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 2019. The loan has been renewed
for a further period of 12 months in March 2019 and is
due in March 2020.
f) Structured investments purchased from Volcan
Investments Limited
In December 2018, as part of its cash management activities,
Cairn India Holdings Limited (CIHL), a step-down subsidiary
of the Company, entered into a tripartite agreement with
Volcan and one of its subsidiaries. Under the agreement, CIHL
purchased an economic interest in a structured investment for
the equity shares of Anglo American Plc (AA Plc), a company
listed on the London Stock Exchange, from Volcan for a total
consideration of ` 3,812 Crore (GBP 428 million) (of which ₹
` 1,816 Crore (GBP 200 million) has been paid up to March 31,
2019), determined based on an independent third-party
valuation. The ownership of the underlying shares, and the
associated voting interests, remained with Volcan and the
investment would mature in two tranches in April 2020 and
October 2020. As part of the agreement, CIHL also received
a put option (embedded derivative) from the aforementioned
subsidiary, the value of which was not material at initial
recognition. Later during the year, certain terms of the
aforesaid agreement were modified, and it was converted into
a biparty agreement between CIHL and Volcan. The revision in
the terms did not have any material effect on the fair value of
the instrument on that date.
As per the revised agreement, if the share price of AA Plc
remain above the Put exercise price, CIHL would be entitled
to an amount determined based on the share price of AA Plc
multiplied by 15 million and 11 million shares respectively on
the aforementioned two maturity dates. Alternatively, CIHL
also has an option to realise the instrument for ` 2,475 Crore
(GBP 274 million) and ` 1,712 Crore (GBP 189 million) on the
respective maturity dates.
Terms and conditions of transactions with related parties
All transactions with related parties are done in the ordinary
course of business. For the year ended March 31, 2019, 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.
There are no outstanding debts or loans due from directors
or other officers (as defined under Section 2(59) of the
Companies Act, 2013) of the Company.
39. SUBSEQUENT EVENTS
There are no material adjusting or non-adjusting subsequent
events, except as already disclosed.
428
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
40. 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 Subsidiaries
Principal
activities
Country of
Incorporation
Immediate
holding company
The Company’s / Immediate holding
Company’s percentage holding (in %)
As at
March 31, 2019
As at
March 31, 2018
Cairn Energy India Pty Limited
Oil and gas exploration,
development and
production
Australia
Cairn India Holdings Limited
100.00
100.00
1
2
3
4
5
38
39
Copper Mines of Tasmania Pty Limited ("CMT") Copper mining
Thalanga Copper Mines Pty Limited ("TCM") Copper mining
Bharat Aluminium Company Limited
("BALCO")
Electrosteel Steels Limited3
Australia
Australia
India
Goa Sea Port Private Limited
Hindustan Zinc Limited ("HZL")
MALCO Energy Limited ("MEL")
Maritime Ventures Private Limited
Paradip Multi Cargo Berth Private Limited
Sesa Mining Corporation Limited
Sesa Resources Limited ("SRL")
Sterlite Ports Limited
Talwandi Sabo Power Limited ("TSPL")
6
7
8
9
10
11
12
13
14
15 Vedanta Star Limited***
16 Vizag General Cargo Berth Private Limited
17
18
19
20
Killoran Lisheen Finance Limited
Killoran Lisheen Mining Limited
Lisheen Milling Limited
Lisheen Mine Partnership
India
Aluminium mining and
smelting
Manufacturing of Steel
& DI Pipe
Infrastructure
India
Zinc mining and smelting India
India
Power generation
India
Infrastructure
India
Infrastructure
India
Iron ore mining
India
Iron ore mining
India
Infrastructure
India
Power generation
India
Operating and holding
Company
India
Infrastructure
Ireland
Investment company
Ireland
Zinc and lead mining
Manufacturing
Ireland
Mining Partnership Firm Ireland
Monte Cello BV
Monte Cello BV
Vedanta Limited
Vedanta Star Limited
Sterlite Ports Limited
Vedanta Limited
Vedanta Limited
Sterlite Ports Limited
Vedanta Limited
Sesa Resources Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
Vedanta Limited
Vedanta Lisheen Holdings Limited
Vedanta Lisheen Holdings Limited
Vedanta Lisheen Holdings Limited
50% each held by Killoran
Lisheen Mining Limited &
Vedanta Lisheen Mining Limited
Vedanta Lisheen Holdings Limited
THL Zinc Holing BV
Vedanta Lisheen Holdings Limited
Cairn India Holdings Limited
21 Vedanta Exploration Ireland Limited
22 Vedanta Lisheen Holdings Limited
23 Vedanta Lisheen Mining Limited
24 AvanStrate Inc. ('ASI')1
25 Cairn India Holdings Limited
26 Western Cluster Limited
Bloom Fountain Limited
27
Exploration company
Investment company
Zinc and lead mining
Operating and holding
Company
Investment company
Iron ore mining
Operating (Iron ore) and
Investment Company
Ireland
Ireland
Ireland
Japan
Jersey
Liberia
Mauritius
Vedanta Limited
Bloom Fountain Limited
Vedanta Limited
28 CIG Mauritius Holdings Private Limited
Investment Company Mauritius
29 CIG Mauritius Private Limited
Investment Company Mauritius
Cairn Energy Hydrocarbons
Limited
CIG Mauritius Holdings Private
Limited
30
31
32
33
34
Sesa Sterlite Mauritius Holdings Limited*
Investment Company Mauritius
Bloom Fountain Limited
THL Zinc Ltd
Investment company
Mauritius
THL Zinc Ventures Ltd
THL Zinc Ventures Ltd
Investment company
Mauritius
Vedanta Limited
Twin Star Energy Holdings Limited ("TEHL")* Investment company
Mauritius
Bloom Fountain Limited
Twin Star Mauritius Holdings Limited ("TMHL")* Investment company
Mauritius
Twin Star Energy Holdings Limited
35 Amica Guesthouse (Proprietary) Limited
36 Namzinc (Proprietary) Limited
37
Rosh Pinah Health Care (Proprietary)
Limited
Accommodation and
catering services
Namibia
Skorpion Zinc (Proprietary)
Limited
Owns and operates zinc
refinery
Namibia
Skorpion Zinc (Proprietary)
Limited
Namibia
Skorpion Zinc (Proprietary)
Limited
Leasing out of medical
equipment and building
and conducting
services related thereto
Exploration,
development, production
and sale of zinc ore
100.00
100.00
51.00
90.00
100.00
64.92
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.63
100.00
100.00
100.00
100.00
100.00
51.00
-
100.00
64.92
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.63
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
69.00
69.00
Skorpion Mining Company (Proprietary)
Limited ('NZ')
Namibia
Skorpion Zinc (Proprietary)
Limited
100.00
100.00
Skorpion Zinc (Proprietary) Limited ('SZPL') Operating (Zinc) and
Investment Company
Namibia
THL Zinc Namibia Holdings
(Proprietary) Limited
100.00
100.00
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 429
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
S. No Subsidiaries
40
41
42 Monte Cello BV (“MCBV”)
43
THL Zinc Holding BV
44 Cairn Energy Discovery Limited
THL Zinc Namibia Holdings (Proprietary)
Limited (“VNHL”)
Lakomasko BV
Principal
activities
Mining and Exploration
and Investment company
Investment company
Investment company
Investment company
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Oil and gas exploration,
development and
production
Black Mountain Mining (Proprietary) Limited Exploration,
45 Cairn Energy Gujarat Block 1 Limited
46 Cairn Energy Hydrocarbons Limited
47 Cairn Exploration (No. 2) Limited
48
Country of
Incorporation
Namibia
Immediate
holding company
THL Zinc Ltd
The Company’s / Immediate holding
Company’s percentage holding (in %)
As at
March 31, 2019
100.00
As at
March 31, 2018
100.00
Netherlands THL Zinc Holding BV
Netherlands Vedanta Limited
Netherlands Vedanta Limited
Scotland
Cairn India Holdings Limited
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Scotland
Cairn India Holdings Limited
100.00
100.00
Scotland**
Cairn India Holdings Limited
100.00
100.00
Scotland
Cairn India Holdings Limited
100.00
100.00
South Africa THL Zinc Ltd
74.00
74.00
49 Cairn South Africa Pty Limited
50 AvanStrate Korea Inc1
51 Cairn Lanka Private Limited
52 AvanStrate Taiwan Inc1
53
Fujairah Gold FZC
development, production
and sale of zinc, lead,
copper and associated
mineral concentrates
Oil and gas exploration,
development and
production
Manufacturer of LCD
glass substrate
Oil and gas exploration,
development and
production
Manufacturer of LCD
glass substrate
Gold & silver processing United Arab
Sri Lanka
Taiwan
South Africa Cairn Energy Hydrocarbons
Limited
South Korea Avanstrate (Japan) Inc.
100.00
100.00
51.63
51.63
CIG Mauritius Private Limited
100.00
100.00
Avanstrate (Japan) Inc.
51.63
51.63
Malco Energy Limited
100.00
100.00
Vedanta Limited
100.00
100.00
54
Sterlite (USA) Inc.*
Investment company
Emirates
United States
of America
*Under liquidation **Principal place of business is in India ***Incorporated during the current year
1 On December 28, 2017, the Group through its wholly owned subsidiary, acquired 51.6% equity stake in AvanStrate Inc.
(ASI) (refer note 4(b)).
2 The Group also has interest in certain trusts which are neither significant nor material to the Group.
3 On June 4, 2018, the Group through its wholly owned subsidiary, acquired 90.0% equity stake in Electrosteel Steels Limited (ESL)
(refer note 4(a)).
b) 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:
Oil & gas blocks/ fields
Operating Blocks
Ravva block-Exploration, Development and Production
CB-OS/2 – Exploration
CB-OS/2 - Development & production
RJ-ON-90/1 – Exploration
RJ-ON-90/1 – Development & production
South Africa Block1-Exploration 1
Non-Operating Blocks
KG-ONN-2003/12
Area
(%) Participating Interest
As at
March 31, 2019
As at
March 31, 2018
Krishna Godavari
Cambay Offshore
Cambay Offshore
Rajasthan Onshore
Rajasthan Onshore
Orange Basin South Africa Offshore
22.50
60.00
40.00
100.00
70.00
60.00
22.50
60.00
40.00
100.00
70.00
60.00
Krishna Godavari Onshore
49.00
49.00
(1) Application for closure has been filed with relevant authorities in September, 2018
(2) Operatorship has been transferred to Oil and Natural Gas Corporation (ONGC) w.e.f. July 7, 2014
(3) PR - OSN - 2004/1 block was relinquished on June 30, 2017.
430
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
c) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the group as at March 31, 2019 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.
S. No. Associates
1
2
RoshSkor Township (Pty) Limited
Gaurav Overseas Private Limited
S. No. Jointly controlled entities
1
2
3
Rampia Coal Mines and Energy Private Limited
Madanpur South Coal Company Limited
Goa Maritime Private Limited
41. OTHER NOTES
a) 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 currently pending for hearing.
b) (i)
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 provides 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 to be notified.
The Government of India without prejudice to the
position on the Put / Call option issue has received
approval from the Cabinet for divestment and
the Government is looking to divest through the
auction route. Meanwhile, the Supreme Court has,
in January 2016, directed status quo pertaining to
disinvestment of Government of India’s residual
shareholding in a public interest petition filed which is
currently pending and sub-judice.
Country of
incorporation
Namibia
India
Country of
incorporation
India
India
India
% Ownership interest
As at
March 31, 2019
50.00
50.00
As at
March 31, 2018
50.00
50.00
% Ownership interest
As at
March 31, 2019
17.39
18.05
50.00
As at
March 31, 2018
17.39
18.05
50.00
(ii) 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 “tag along” 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 August 02, 2019.
Meanwhile, the Government of India without prejudice to its
position on the Put / Call option issue has received approval
from the Cabinet for divestment and the Government is
looking to divest through the auction route.
On 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
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 431
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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) Electrosteel Steels Limited had filed application for
renewal of Consent to Operate (‘CTO’) on August 24, 2017
for the period of five years which was denied by Jharkhand
State Pollution Control Board (‘JSPCB’) on August 23, 2018.
Hon’ble High Court of Jharkhand has extended a stay on the
order of denial of CTO by JSPCB and continued their interim
order to allow the operations till next hearing. Hon’ble High
Court has also extended stay against order of Ministry of
Environment, Forests and Climate Change (MOEF) dated
September 20, 2018 in respect of environment clearance.
Presently the stay has been extended till May 16, 2019.
d) Pursuant to Management Committee recommendation and
minutes of Empowered Committee of Secretaries (ECS) filed
by GoI, Vedanta Limited had considered cost recovery of ₹
` 1,618 Crore (US$ 251 million) in FY 2017-18, being the cost
incurred over the initially approved FDP of Pipeline Project.
Vedanta Limited’s claim for the resultant profit petroleum of
` 297 Crore (US$ 43 million) (refer note 10), which had been
previously paid, has been disputed by the GoI. The Group
believes that it has a good case on merits to recover the
amount and has therefore treated it as a non-current
recoverable amount.
42. 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 (2018)”. The changes to the reserves
are generally on account of future development projects,
application of technologies such as enhanced oil recovery
techniques and true up of the estimates. The management’s
internal estimates of hydrocarbon reserves and resources at
the period end are as follows:
Country
Particulars
Rajasthan MBA Fields India
Rajasthan MBA EOR India
India
Rajasthan Block
Other Fields
Ravva Fields
CBOS/2 Fields
Other fields
Total
India
India
India
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, 2019
2,288
-
3,405
As at
March 31, 2018
2,288
-
3,460
As at
March 31, 2019
362
293
428
As at
March 31, 2018
371
335
430
As at
March 31, 2019
253
205
299
As at
March 31, 2018
260
235
301
724
254
335
7,006
733
251
335
7,067
39
33
40
1,195
45
34
48
1,263
9
13
22
801
10
13
24
843
The Company’s net working interest proved and probable reserves is as follows:
Particulars
Reserves as of April 01, 2017*
Additions / revision during the year
Production during the year
Reserves as of March 31, 2018**
Additions / revision during the year#
Production during the year
Reserves as of March 31, 2019***
Proved and probable
reserves
Proved and probable
reserves (developed)
Oil
(mmstb)
112
28
(42)
98
259
(42)
315
Gas
(bscf)
48
12
(8)
52
224
(12)
264
Oil
(mmstb)
100
13
(42)
71
149
(42)
178
Gas
(bscf)
15
21
(8)
28
113
(12)
129
* 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)
*** Includes probable oil reserves of 116.21 mmstb (of which 16.03 mmstb is developed) and probable gas reserves of 89.00 bscf (of which 24.19
bscf is developed)
# The increase in reserve is on account of PSC extentsion for the Rajasthan and Ravva block. For more details, refer note 3(C)xi
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
432
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
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Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
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1
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19 439
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 MANAGEMENT REVIEWSTATUTORY REPORTSFINANCIAL STATEMENTSINTEGRATED REPORT
Form AOC-I
Salient features of Associate companies and Joint Ventures pursuant to first proviso to sub section (3) of section 129 read with rule 5 of
Companies (Accounts) Rules, 2014
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, 2018 March 31, 2019 March 31, 2019 March 31, 2019 March 31, 2019
2 Shares of Associate/Joint Ventures held by the
Company at the year end
- Number
- Amount of investment (` in Crore)
- % of holding
3 Description of how there is significant influence
50
4
0
50.00%
50.00%
By way of
ownership
By way of
ownership
3,23,000
1,52,266
5,000
2,72,29,539
2
18.05%
N.A.
0
50.00%
N.A.
3
17.39%
N.A.
4 Networth attributable to shareholding as per latest
audited Balance sheet (` in Crore)
5 Profit/(Loss) for the year (` in Crore)
4
0
0
(0)
1
(0)
(0)
0
0
0
For and on behalf of Board of Directors
Navin Agarwal
Executive Chairman
DIN 00006303
Place: Mumbai
Date: May 07, 2019
Srinivasan Venkatakrishnan
Whole-Time Director and
Chief Executive Officer
DIN 08364908
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Prerna Halwasiya
Company Secretary
ICSI Membership No. A20856
440
Notes forming part of the consolidated financial statementsas at and for the year ended March 31, 2019 VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19FINANCIAL STATEMENTS
136
VEDANTA LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2018-19
Design and production of the Integrated Report at
(www.emperor.works)
and
(hello@aicl.in)
ZINC-LEAD-SIVER I OIL & GAS I ALUMINIUM & POWER I COPPER I IRON ORE & STEEL
VEDANTA LIMITED
1st Floor, ‘C’ wing, Unit 103, Corporate Avenue, Atul Projects, Chakala,
Andheri (East), Mumbai–400093, Maharashtra
CIN: L13209MH1965PLC291394 | www.vedantalimited.com