Vedanta Limited: history, ownership, mission, how it works & makes money

A Brief History of Vedanta Limited

Vedanta Limited, founded in 1976 as a subsidiary of the UK-based Vedanta Resources Plc, has evolved into one of India's largest diversified natural resources companies. Initially, the company focused on zinc production in India through its subsidiary, Hindustan Zinc, which it acquired in 2002.

In fiscal year 2021, Vedanta reported a consolidated revenue of ₹1,06,053 crores (approximately $14.1 billion), reflecting a significant recovery following the impacts of the COVID-19 pandemic. The company's net profit for the same fiscal year was ₹24,617 crores (around $3.3 billion), showcasing robust operational performance across its business segments.

Vedanta operates in sectors including zinc, lead, silver, oil and gas, iron ore, steel, copper, and aluminum. The company’s flagship company, Hindustan Zinc, is the world's second-largest zinc producer and has contributed significantly to Vedanta's revenue stream.

In 2015, Vedanta announced a major expansion in the oil and gas segment with its acquisition of the oil assets of the UK-based Cairn Energy for $8.5 billion. This acquisition positioned Vedanta as a key player in the Indian oil and gas market, with Cairn India's production reaching approximately 200,000 barrels of oil equivalent per day (boepd) at its peak.

As of March 2023, Vedanta had a market capitalization of approximately ₹1,20,000 crores (about $16 billion). The company has consistently invested in capital expenditure, reporting an investment of ₹12,000 crores (around $1.6 billion) for ongoing expansion projects across its various segments during the fiscal year 2023.

In addition to its operational achievements, Vedanta has been actively engaging in sustainability initiatives, committing to reduce carbon emissions by 20% by 2025. The company's focus on sustainable mining practices includes investments in renewable energy projects, with ₹1,500 crores (around $200 million) allocated for renewable energy initiatives from 2022 to 2025.

Vedanta's financial health is further reinforced by its robust debt management strategies. As of March 2023, the company reported total net debt of ₹64,000 crores (approximately $8.5 billion), with a net debt to EBITDA ratio of around 1.5, indicating a manageable level of leverage in relation to its earnings before interest, taxes, depreciation, and amortization.

The company has also been involved in various strategic divestments to streamline its operations. In 2022, Vedanta sold its interest in the Oyu Tolgoi copper-gold project in Mongolia for $1.1 billion, which allowed it to enhance its liquidity position and focus on its core businesses in India.

Vedanta’s commitment to shareholder returns is evident in its dividend policy. In fiscal year 2022, Vedanta announced a dividend payout of ₹12,000 crores (approximately $1.6 billion), signifying a dividend yield of around 8% based on its market price at that time.

A Who Owns Vedanta Limited

Vedanta Limited, a diversified natural resources company, is publicly traded on the National Stock Exchange of India and the Bombay Stock Exchange. As of the latest data, the ownership structure is characterized by a mix of institutional and retail investors, along with significant control from its parent company.

The principal ownership is held by Vedanta Resources Limited, a company incorporated in the United Kingdom. As of October 2023, Vedanta Resources owns approximately 70.01% of Vedanta Limited. This ownership consolidates Vedanta Resources’ influence over Vedanta Limited's strategic decisions and operational direction.

Institutional investors, which contribute approximately 20.15% to the ownership structure, include notable entities such as LIC (Life Insurance Corporation of India) and various mutual funds. Retail investors hold around 9.84% of shares, demonstrating a robust interest from the general public, despite the significant influence of institutional stakeholders.

Vedanta Limited operates in several sectors including zinc, lead, silver, copper, aluminum, iron ore, and oil and gas, making it a key player in the Indian mining and metals industry. The diversification strategy has allowed the company to maintain a stable revenue stream and manage financial risks effectively.

In the financial year ending March 31, 2023, Vedanta Limited reported consolidated revenues of approximately ₹1,16,888 crore (around $15 billion), reflecting a year-on-year increase of 6.4%. Net income for the same period was approximately ₹18,427 crore (around $2.4 billion), equating to a net profit margin of about 15.8%.

Market capitalization as of October 2023 stood at approximately ₹1.75 lakh crore (around $21 billion), indicating a strong market presence and investor confidence despite market fluctuations.

Vedanta Limited's operational focus and governance remain heavily influenced by Vedanta Resources, which is chaired by Anil Agarwal. The company's strategic decisions and operational expansions often align closely with the objectives set forth by Vedanta Resources, ensuring a cohesive corporate strategy across its global operations.

Vedanta Limited Mission Statement

Vedanta Limited, a diversified natural resources company, operates with a mission that embodies its commitment to sustainable practices and stakeholder value. The company aims to "enhance shareholder value through sustainable and responsible mining." This mission is deeply integrated into its operations across various segments including zinc, lead, silver, iron ore, copper, aluminium, and oil and gas.

As of FY 2023, Vedanta reported revenues of approximately ₹1.15 trillion ($14.6 billion), a reflection of its operational scale and market presence. The mission focuses on creating a positive impact not just on shareholders, but also on employees, communities, and the environment, emphasizing sustainability and ethical governance.

Incorporating sustainable practices, Vedanta aims for a balance between production and environmental stewardship. The company has set ambitious targets to reduce emissions and enhance resource efficiency. For example, Vedanta has committed to reducing Scope 1 emissions by 33% by 2025, based on its 2019 levels.

Core Values

• Integrity: Upholding transparency and ethics in all dealings.
• Sustainability: Commitment to responsible mining that minimizes environmental impact.
• Innovation: Leveraging technology to enhance operational efficiency and safety.
• Excellence: Striving for the highest standards in all aspects of business.

Financial Highlights

The company’s fiscal performance underscores its mission. Key financial metrics include:

Vedanta's mission statement not only reflects its objectives but also aligns with its operational strategies. The focus on safety is evident, with a reported decrease in lost-time injury frequency rates (LTIFR) to 0.12 in FY 2023, a significant improvement attributed to enhanced safety protocols.

The company's approach to community engagement is also notable. In FY 2023, Vedanta invested ₹1.5 billion ($18.9 million) in community development programs, emphasizing health, education, and livelihood initiatives, reaffirming its commitment to social responsibility.

Overall, Vedanta's mission statement serves as a guiding principle that shapes its sustainability efforts, financial performance, and social impact, ensuring long-term value creation for all stakeholders involved.

How Vedanta Limited Works

Vedanta Limited operates as a diversified natural resources company with a presence in various sectors such as metals and mining, oil and gas, and power generation. The company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India, and part of the Vedanta Group.

The company primarily functions through several segments:

• Metals and Mining: This segment includes the production of zinc, lead, silver, copper, aluminum, and iron ore. For the fiscal year 2023, Vedanta reported zinc production of approximately 1.2 million tonnes, while its copper production stood at about 254,000 tonnes.
• Oil and Gas: Vedanta's oil and gas operations are chiefly focused in Rajasthan and include exploration, production, and refining. The average daily production of crude oil for FY 2023 was around 206,000 barrels, contributing significantly to the company’s revenue.
• Power: The power segment includes the generation of electricity from thermal and renewable sources. Vedanta has a total installed power generation capacity of 4,000 megawatts.

In FY 2023, Vedanta Limited reported a consolidated revenue of ₹ 1,16,000 crores (approximately USD 14 billion), showing a year-on-year growth of 18%. The operating EBITDA for the same period was approximately ₹ 28,000 crores (around USD 3.4 billion), with an EBITDA margin of 24%.

Below is a detailed table representing the key financial metrics for Vedanta Limited for the fiscal year ending March 31, 2023:

Vedanta employs a combination of vertical integration and strategic partnerships to enhance operational efficiencies and reduce costs. The company has major operations in India, with additional interests in Africa and Australia.

Vedanta’s commitment to sustainability includes investments in technology to minimize environmental impact. In FY 2023, the company allocated approximately ₹ 3,000 crores (about USD 370 million) towards sustainable practices and reducing carbon emissions.

The stock performance of Vedanta Limited has shown fluctuations influenced by global commodity prices and geopolitical factors. As of October 2023, the stock price was trading at approximately ₹ 290 per share, reflecting a year-to-date increase of 26%.

In conclusion, Vedanta Limited plays a crucial role in various sectors of natural resources, with significant contributions to the Indian economy through its diverse operations and strategic growth initiatives.

How Vedanta Limited Makes Money

Vedanta Limited, a major player in the mining and metals sector, generates its revenue through a diversified portfolio of operations across various industries. The company is involved in the extraction and processing of minerals, primarily zinc, lead, silver, oil, and copper. Their financial performance is directly tied to the global demand for these resources.

Revenue Breakdown by Segment

The revenue streams of Vedanta can be broken down into several key segments:

• Zinc
• Oil & Gas
• Copper
• Iron Ore
• Power
• Aluminium

As of the fiscal year 2022, Vedanta reported the following revenue contributions from its segments:

In total, Vedanta's revenue for the fiscal year 2022 was approximately 72,000 INR Crores.

Market Dynamics

Vedanta's profitability is influenced by global market dynamics. The prices of metals and minerals are subject to fluctuations based on supply and demand, geopolitical factors, and macroeconomic conditions. For instance, as of Q2 2023, the average zinc price was around USD 3,000 per metric ton, while copper prices hovered around USD 4,500 per metric ton.

The company also benefits from operational efficiencies and cost control measures, which are crucial in a commodity-driven market. Vedanta reported a total cost of production at INR 52,000 Crores in fiscal 2022, allowing it to maintain a healthy operating margin.

Strategic Investments and Diversification

Vedanta has made significant investments in enhancing its operational capacity and exploring new reserves. As of 2023, the company has allocated over INR 10,000 Crores for capital expenditures to expand its zinc and copper operations. This strategic push helps to ensure long-term revenue growth and market competitiveness.

Additionally, Vedanta's diversification into renewable energy generation aims to complement its core business. The company plans to invest INR 5,000 Crores in solar and wind projects over the next five years.

Financial Performance and Stock Trends

Vedanta's stock performance also reflects its operational success. As of October 2023, the company's stock traded at approximately INR 350 per share. Over the past year, Vedanta's stock has risen by 30%, driven by robust demand for its primary products and effective management strategies.

The company reported an EBITDA of INR 18,000 Crores for the fiscal year 2022, showcasing its strong earnings potential in a challenging market environment.