Vedanta Ltd Management Discussions.

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 Companys 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%. HZLs 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 Companys 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 Companys Oil & Gas business, Cairn India, is owned and operated by Vedanta Limited. It is one of Indias largest independent oil & gas exploration and production companies, and indeed is the countrys 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 Indias 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 Companys 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. Vedantas 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. BALCOs operations include two bauxite mines, four CPPs (270MW, 540MW, 600MW and 300MW), and refining, smelting and fabrication (570kt) facilities in Central India.

Commercial power sector

The Companys 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 Limiteds 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 Companys 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.

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. ESLs current operating capacity is 1.5mtpa with a diversified product mix of wire rod, rebar, DI pipe and pig iron.

Copper sector

The Companys 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 Limiteds appeal to the National Green Tribunal (NGT) against these orders, NGT set aside the Tamil Nadu Governments order and directed TNPCB to renew the CTO, directing that the impugned orders were unsustainable and closure of the unit unjustifiable.

However, in February 2019, the Honble Supreme Court set aside NGTs 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 Limiteds 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 Companys 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 Companys 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 Indias east coast. The Company also owns a 100% interest in Avanstrate Inc (ASI), which manufactures LCD glass substrate.


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: Rs. 24,900 crore, margin 35%).

Production volumes contributed to an increase in EBITDA of Rs. 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 Rs. 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 Rs. 66,226, crore, an increase of Rs. 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 Rs. 26,958 crore at 31 March 2019 from Rs. 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 Rs. 39,268 crore and Net Debt to EBITDA ratio at 1.1x, which is the lowest among Indian peers.


EBITDA decreased by 4% in FY2019 to Rs. 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.


bbb biaieu;
1 Consolidated EBITDA FY2019 FY2018 % change
Zinc 11,298 13,669 (17)%
-India 10,600 12,254 (13)%
-International 698 1,415 (51)%
Oil & Gas 7,656 5,429 41%
Aluminium 2,202 2,654 (17)%
Power 1,527 1,665 (8)%
Iron Ore 584 400 46%
Steel 791 - -
Copper India (235) 1,055 -
Others 189 28 -
Total EBITDA 24,012 24,900 (4)%


EBITDA for FY2018 24,900
Market and regulatory: Rs. 632 crore
a) Prices, premium/discount (523)
b) Direct raw material inflation (2,236)
c) Foreign exchange movement 3,203
d) Profit petroleum to GOI at Oil & Gas 87
e) Regulatory changes 101
Operational: Rs. (66) crore
f) Volume 955
g) Cost and marketing (1,021)
h) Others (1,454)
EBITDA for FY2019 24,012


Commodity price fluctuations have a significant impact on the Groups business. During FY2019, we saw a net negative impact on EBITDA of Rs. 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.


Average aluminium LME prices decreased to US$2,035 per tonne in FY2019, down 1% y-o-y; this had a negative impact of Rs. 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.


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 Rs. 2,236 crore.


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 Groups EBITDA, given the local cost base and predominantly US dollar-linked pricing.

Favourable currency movements increased EBITDA by Rs. 3,203 crore compared to FY2018.


The profit petroleum outflow to the Government of India (GOI), as per the production sharing contract (PSC), reduced by Rs. 87 crore. The reduction was primarily due to the higher recovery of capital expenditure over the previous year.


During FY2019, regulatory changes had a cumulative positive impact on the Group EBITDA of Rs. 101 crore.

Information regarding key exchange rates against the US dollar:

Average year ended 31 March 2019 Average year ended 31 March 2018 % change As at 31 March 2019 As at 31 March 2018
Indian rupee 69.89 64.45 8% 69.17 65.04
South African rand 13.76 13.00 6% 14.48 11.83


Higher volumes contributed to an increase in EBITDA of Rs. 955 crore, generated through these key Group businesses:

Aluminium (positive Rs. 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 Rs. 454 crore.

Electrosteel (positive Rs. 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 Rs. 792 crore.

Power (positive Rs. 186 crore)

The power business contributed positively to EBITDA by Rs. 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 Rs. 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 Rs. 473 crore.


Higher costs resulted in a fall in EBITDA by Rs. 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.


This primarily includes the reduction in EBITDA due to the shutdown of the Tuticorin smelter.

Finance review



(Rs. crore, unless stated)

Particulars FY2019 FY2018 % Change
Net Sales/Income from Operations 90,901 92,011 (1)%
Other Operating Income 1,147 912 26%
EBITDA 24,012 24,900 (4)%
Adjusted EBITDA margin1 (%) 30% 35% -
Finance Cost 5,689 5,112 11%
Investment Income 3,618 3,205 13%
Exchange Gain /(Loss) (509) (38) -
Profit before Depreciation and Taxes 21,432 22,955 (7)%
Depreciation and Amortisation 8,192 6,283 30%
Profit before exceptional items 13,240 16,672 (21)%
Exceptional items2 : credit/(expense) 320 2,897 (89)%
Taxes3 3,862 5,877 (34)%
Profit after taxes after exceptional items 9,698 13,692 (29)%
Profit after taxes (before exceptional items) 9,490 12,869 (26)%
Profit after taxes (before exceptional items & DDT) 9,490 11,333 (16)%
Minority interest 2,633 3,350 (21)%
Attributable PAT after exceptional items 7,065 10,342 (32)%
Attributable PAT (before exceptional items) 6,857 9,561 (28)%
Attributable PAT (before exceptional items & DDT) 6,857 8,025 (15)%
Basic earnings per share ( per share) 19.07 28.30 (33)%
Basic EPS before exceptional items ( per share) 18.50 26.17 (29)%
Basic EPS before exceptional items & DDT ( per share) 18.50 21.96 (16)%
Exchange Rate (/$)-Average 69.89 64.45 8%
Exchange Rate (/$)-Closing 69.17 65.04 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 Rs. 112 crore on special items in FY2019 (FY2018: charge of Rs. 2,074 crore); DDT included in Tax Expense in FY2019 is Rs. Nil crore (FY2018: credit of 1,536 crore).

4) Previous period figures have been regrouped/rearranged wherever necessary to conform to current period presentation.


Revenue for the year was Rs. 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 for the year was Rs. 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 for the year was Rs. 8,192 crore compared to Rs. 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.


The blended cost of borrowings was 8.1% for FY2019 compared to with 7.8% in FY2018.

The finance cost for FY2019 was Rs. 5,689 crore, 11% higher y-o-y compared to Rs. 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 Rs. 3,618 crore, 13% higher y-o-y compared to Rs. 3,205 crore in FY2018. This was mainly due to mark to market gains on a treasury investment made by Vedantas 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.


The exceptional gains for FY2019 was at Rs. 320 crore mainly on account of reversal of previously recorded impairment of Rs. 261 crore in Oil & Gas businesss KG ONN block and the reversal of a Rs. 59 crore charge relating to arbitration of a historical vendor claim pursuant to a Supreme Court Order, in the Aluminium business.


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 PAT before exceptional items & DDT was Rs. 6,857 crore in FY2019 compared to Rs. 8,025 in FY2018 (down 15% y-o-y).


Earnings per share before exceptional items & DDT for FY2019 were Rs. 18.50 per share as compared to Rs. 21.96 per share in FY2018.


Considering the total interim dividend of Rs. 18.85 per share, the Board has decided not to declare a final dividend in FY2019.


Total shareholders fund as on 31 March, 2019 aggregated to Rs. 62,297 crore as compared to Rs. 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.


The net fixed assets as on 31 March, 2019 were Rs. 121,356. This comprises of Rs. 22,236 crore as capital work-in-progress as on 31 March 2019.


Our financial position remains strong with cash and liquid investments of Rs. 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 c6,400 crore as on 31 March 2019.

Gross debt as on 31 March 2019 was Rs. 66,226 crore, an increase of Rs. 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 c43,200 crore and short-term working capital loans of c23,000 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 Vedantas Rating from AA/ Positive to AA/Stable.


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.


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 Rs. 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.

Divisional review

Zinc India


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 Indias 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 Rs. FTSE4Good series 2018.


1 Production (kt) FY2019 FY2018 % change
Total mined metal 936 947 (1%)
Underground mines 936 724 29%
Open cast mines - 223 -
Refinery metal production 894 960 (7%)
Refined zinc-integrated 696 791 (12%)
Refined lead-integrated1 198 168 18%
Production-silver (in tonnes)2 679 558 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.


FY2019 FY2018 % change
Average zinc LME cash settlement prices US$/tonne 2,743 3,057 (10)%
Average lead LME cash settlement prices US$/tonne 2,121 2,379 (11)%
Average silver prices US$/ounce 15.4 16.9 (9)%


FY2019 FY2018 % change
Unit costs (US$ per tonne)
Zinc (including royalty) 1,381 1,365 1%
Zinc (excluding royalty) 1,008 976 3%


(Rs. crore, unless stated)

FY2019 FY2018 % change
Revenue 20,656 22,050 (6)%
EBITDA 10,600 12,254 (13)%
EBITDA margin (%) 51% 56% -


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 years 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.


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 years 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.

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

Zincs 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.


Revenue for the year was Rs. 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.


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.

Divisional review

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.


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.

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 Udaipurs sewage.


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 years 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.


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.

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.


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.


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.


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 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.


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 (kt) FY2019 FY2018 % change
Total production (kt) 148 157 (5%)
Production-mined metal (kt)
BMM 65 72 (10)%
Gamsberg1 17 - -
Refined metal Skorpion 66 84 (22)%

11ncludes trial run production of 10 KT


FY2019 FY2018 % change
Zinc (US$ per tonne) unit cost 1,912 1,603 19%


( crore, unless stated)

FY2019 FY2018 % change
Revenue 2,738 3,446 (21)%
EBITDA 698 1,415 (51)%
EBITDA margin (%) 25% 41% -


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.

Skorpions 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 partners 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.


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.


During the year, revenue decreased by 21% to Rs. 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 Rs. 698 crore, down 51% from 1,415 crore in FY2018.


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.


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 Internationals 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.


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 Skorpions 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.


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.


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 Indias 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.


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 Rs. 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 Rs. 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.

Oil & Gas


Our Oil & Gas business is committed to protecting the environment, minimising resource consumption and driving towards our goal of Rs. 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 Rs. Noteworthy Water Efficient Units, in the Rs. within fence category of the National Award for Excellence in Water Management 2018 by CII.


Unit FY2019 FY2018 % change
Gross Operated production Boepd 188,784 185,587 2%
Rajasthan Boepd 155,903 157,983 (1)%
Ravva Boepd 14,890 17,195 (13)%
Cambay Boepd 17,991 10,408 73%
Oil Bopd 178,207 177,678 0%
Gas Mmscfd 63.5 47.4 34%
Net production-working interest1 Boepd 119,798 118,620 1%
Oil Bopd 114,214 114,774 0%
Gas Mmscfd 33.5 23.1 45%
Gross production Mmboe 68.9 67.7 2%
Working interest production Mmboe 43.7 43.3 1%

includes net production of 119boepd from the KG-ONN block, which is operated by ONGC. Cairn holds a 49% stake.


FY2019 FY2018 % change
Average Brent prices-US$ per barrel 70.4 57.5 22%


( crore, unless stated)

FY2019 FY2018 % change
Revenue 13,223 9,536 39%
EBITDA 7,656 5,429 41%
EBITDA margin (%) 58% 57% -


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.


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.


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.


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.


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 Governments 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.


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 Rs. 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.


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.


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.


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.


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.


An integrated contract for drilling development wells is under award.



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.


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.


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.


In order to increase the reserve and resource base, an integrated contract for drilling exploratory wells is under award.


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) 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.


Vedantas 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.


Our focus and priorities will be to:

• continue to progress towards Rs. 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.


Strong and growing portfolio of value-added products


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 refinerys capacity, growing through a phased programme and subject to bauxite availability.


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 Rs. 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 Rs. 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.


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.


1 Production (kt) FY2019 FY2018 % change
Alumina-Lanjigarh 1,501 1,209 24%
Total aluminium production 1,959 1,675 17%
Jharsuguda I 545 440 24%
Jharsuguda II1 843 666 27%
BALCO I 260 259 -
BALCO II2 311 310 -

1. Including trial run production of 60.5kt in FY2019 vs. 61.8kt in FY2018.

2. Including trial run production of nil in FY2019 vs. 16.1kt in FY2018.


FY2019 FY2018 % change
Average LME cash settlement prices (US$ per tonne) 2,035 2,046 (1)%


(US$ per tonne)

FY2019 FY2018 % change
Alumina cost (ex-Lanjigarh) 322 326 (1)%
Aluminium hot metal production cost 1,940 1,887 3%
Jharsuguda CoP 1,938 1,867 4%
BALCO CoP 1,945 1,923 1%


(Rs. crore, unless stated)

FY2019 FY2018 % change
Revenue 29,229 23,156 26%
EBITDA 2,202 2,654 (17)%
EBITDA margin (%) 8% 11% -



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.


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.


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%).

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.


During the year, revenue increased by 26% to Rs. 29,229 crore, driven by volume ramp up at Jharsuguda and rupee depreciation. EBITDA was lower at Rs. 2,202 crore (FY2018: Rs. 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.



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.


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.


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.


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.



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 IPPs specific water consumption at 2.20 m3/MwH (FY2018: 2.8 m3/MwH).


FY2019 FY2018 % change
Total power sales (MU) 13,515 11,041 22%
Jharsuguda 600MW 1,039 1,172 (11%)
BALCO 600MW 1 2,168 1,536 41%
MALCO2 - 4 -
HZL wind power 449 414 9%
TSPL 9,858 7,915 25%
TSPL-availability 88% 74% -

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.


FY2019 FY2018 % change
Sales realisation (/kWh)1 3.4 2.9 17%
Cost of production (/kWh)1 2.9 2.3 24%
TSPL sales realisation (/kWh)2 4.1 3.5 16%
TSPL cost of production (/kWh)2 3.1 2.5 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.


(Rs. crore, unless stated)

FY2019 FY2018 % change
Revenue 6,524 5,652 15%
EBITDA 1,527 1,665 (8)%
EBITDA margin (%) 23% 25%1 -
1 Excluding one-offs


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.


Average power sale prices, excluding TSPL, increased by 17% at Rs. 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 Rs. 2.9 per kWh (FY2018: Rs. 2.3 per kWh), driven by mainly increased coal prices.

TSPLs average sales price was higher at Rs. 4.1 per kWh (FY2018: Rs. 3.5 per kWh), and power generation cost was higher at Rs. 3.1 per kWh (FY2018: Rs. 2.5 per kWh) driven mainly by increased coal prices.


EBITDA for the year was 8% lower y-o-y at Rs. 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 Rs. 226 crore and Rs. 139 crore at BALCO and at Jharsuguda IPPs respectively.


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 IPPs.


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.

Iron Ore

Record production of 4.1 million tonnes at Karnataka in FY2019


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.


In continuing our journey to Rs. 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 Rs. 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).


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.

Iron Ore


FY2019 FY2018 % change
Saleable ore 4.4 7.1 (38%)
Goa 0.2 4.9 (95%)
Karnataka 4.1 2.2 89%
Pig iron (kt) 686 646 6%
Sales (dmt)
Iron ore 3.8 7.6 (49)%
Goa 1.3 5.4 (77%)
Karnataka 2.6 2.2 19%
Pig iron (kt) 684 645 6%


(Rs. crore, unless stated)

FY2019 FY2018 % change
Revenue 2,911 3,162 (8%)
EBITDA 584 400 46%
EBITDA margin (%) 20% 13% -


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.

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.


In FY2019, revenue decreased to Rs. 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 Rs. 584 crore compared with Rs. 400 crore in FY2018. This was mainly due to higher volumes at Karnataka.


The production from Iron ore Karnataka is expected to be 4.5 WMT (wet million tonnes).


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.



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.


Since the acquisition by Vedanta, we have started to implement the best safety practices of the Vedanta Group to work towards achieving Rs. 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.


Alongside Rs. zero harm, a main priority for ESL is to achieve Rs. zero waste and zero discharge

. In line with this, we have started on a journey to achieve no discharges of water.


FY2019 FY2018 % change
Production (kt) 1,199 1,025 17%
Pig iron 142 179 (21%)
Billet 39 50 (21%)
TMT bar 441 300 47%
Wire rod 427 365 17%
Ductile iron pipes 150 130 15%


(US$ per tonne)
FY2019 FY2018 % change
Pig iron 404 359 13%
Billet 486 447 9%
TMT 564 515 10%
Wire rod 638 558 14%
DI pipe 593 598 (1%)


(US$ per tonne)
FY2019 FY2018 % change
Steel 457 456 1%


Revenue 4,195
EBITDA margin (%) 19%

1. Financial numbers are for a period of 10 months post acquisition


ESLs 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.

Since June 2018, post Vedantas 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 Honble High Court of Jharkhand until the next hearing date, which is due on 16 May 2019.


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.


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.


Since its acquisition by Vedanta with effect from June 2018, ESL has generated EBITDA of Rs. 791 crore. Prudent cost management and improvisation of key matrices played a pivotal role for this turnaround story.


Hot metal production is expected to be c.1.5mtpa in FY2020 and expected EBITDA margin is US$130 to US$140 per tonne.


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.



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.


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.


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.


FY2019 FY2018 % change
Production (kt)
India-cathode 90 403 (78)%


FY2019 FY2018 % change
Average LME cash settlement prices (US$ per tonne) 6,337 6,451 (2)%


FY2019 FY2018 % change
Revenue 10,739 24,951 (57)%
EBITDA (235) 1,055 -
EBITDA margin (%) (2)% 4% -


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).

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 Honble Supreme Court set aside NGTs 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 Honble 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 Companys 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 Governments current favourable support and 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.

Average LME copper prices decreased by 2% compared with FY2018.


During the year, EBITDA was Rs. (235) crore and revenue was Rs. 10,739 crore, a decrease of 57% on the previous years revenue of Rs. 24,951 crore. The reduction in revenue and EBITDA was mainly due to the shutdown of the Tuticorin smelter.


To be advised following the restart of Tuticorin.


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.


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.