WE ARE COMMITTED TO DELIVERING VALUE FOR OUR SHAREHOLDERS, EMPLOYEES, COMMUNITIES AND OTHER STAKEHOLDERS
Vedanta has delivered strong operational performance in FY 2015-16 with relentless focus on cost discipline and improved productivity across all our operations that enabled us to deliver strong earnings and record cash flow. As a result, your Company reduced debt and strengthened its ability to withstand volatility in the tough and challenging commodities market during the year. Vedanta achieved all of this, while maintaining a disciplined approach to capital expenditure and cost optimisation.
Our total capital expenditure reduced significantly and our operations generated record free cash flow of ₹ 11,572 Crore after growth capex. During the period, we evaluated our operating cost structures that resulted in significant efficiency improvements; and we delivered US$ 250 mn this year against our stated target of delivering US$ 1.3 bn cost savings over four years.
Vedanta is consistently one of the largest contributors to the exchequer – to the tune of ₹ 20,600 Crore in FY 2015-16. During the year, we invested ₹ 160 Crore in our extensive CSR programmes across our global business locations, partnering with over 200 NGOs, local governments, hospitals and academic institutions on socio-economic development projects that benefited around 1.75 mn people.
At Vedanta, we believe in supporting developmental goals of local communities and governments. Our Nandghar project is an extension of this belief, which will enable women and children to have a facility for education and entrepreneurship opportunities at their doorsteps. We will construct 4,000 modern Anganwadis (state-of-the-art facilities) over three years. These facilities will be built with innovative technology, solar panels, toilets, and will provide safe drinking water, e-learning and healthcare. In the first phase, 25 lakh community members will benefit from this project.
I am confident that we are creating need-based programmes for community wellbeing, thus contributing to Vedanta’s efforts towards nation building.
The health and safety of our employees continues to be at the top of our agenda. However, despite our best efforts to achieve a zero-harm culture, we had nine fatalities during the year. It is an imperative that we bring considerable improvement in our safety record. Our teams are working towards ushering in global best practices to ensure a safe working environment.
We are committed to India’s focus on alleviating climate change. We have signed the Paris Pledge for action and are updating our carbon strategy, seeking innovative ways to reduce carbon emissions at our power plants.
I commend my teams as everyone at Vedanta has contributed to the Company’s growth and their commitment, dedication and sheer hard work is indeed an inspiration.
FY 2015-16 was a year in which we achieved record production of aluminium, power, copper cathodes and zinc at Zinc India. We began the ramp-up of our capacities at aluminium and iron ore, and operationalised our entire power portfolio of 9,000 MW. The ramp-up of capacities at our Aluminium, Iron Ore and Power businesses should deliver us over 60% volume growth in copper equivalent terms, and will drive strong free cash flows and maximise shareholder returns.
One of the highlights of the year was breaking ground at the Gamsberg project in South Africa, marking the commencement of activities at one of the world’s largest undeveloped zinc deposits.
This year, we resumed production at our iron ore operations in Goa, and we are positioned in the first quartile of the global cost curve. In addition, we gained approval to use power generated from three units of the Jharsuguda power plant for captive use, and received environmental clearance to expand Lanjigarh alumina refinery’s capacity. The removal of export duties on lower grades of iron ore and the increase in aluminium import duty will boost competitiveness and growth.
I am proud of the significant progress that we have made in improving our operational efficiency and optimising costs. This is part of a continuous journey and we will take further steps over the coming year, leveraging the adoption of new technologies and encouraging a culture of innovation among our people.
During the year, we announced a new project in the Make in India initiative of the Government of India, to create a 240-acre aluminium park next to our Jharsuguda smelter. This will serve as a market for downstream products and generate more than 17,000 jobs.
We are committed to India’s focus on alleviating climate change. We have signed the Paris Pledge for action and are updating our carbon strategy, seeking innovative ways to reduce carbon emissions at our power plants. Our dedication to environmental sustainability was recognised twice this year; CII’s Sustainable Plus – the world’s first and only corporate sustainable label – awarded us the Sustainability Plus Platinum Label (BBB rating), and we were listed on the Indian Climate Disclosure Leadership Index in recognition of our disclosure of information on climate change.
At Vedanta, we look forward to FY 2016-17 as a very exciting year ahead. We remain committed to delivering value for our shareholders, employees, communities and other stakeholders through our diversified portfolio of large, longlife and low-cost assets. In line with our stated strategy of simplifying our corporate structure, we aim to complete the merger of Vedanta Limited and Cairn India.
I express my gratitude for the sound guidance and contribution of my fellow Directors. I commend my teams as everyone at Vedanta has contributed to the Company’s growth and their commitment, dedication and sheer hard work is indeed an inspiration. As we continue to navigate our journey of improvement, let us together amplify our rich heritage, continue building a united approach, celebrate our diverse roots and be the leader to create value for all our stakeholders.