a) Prices, premium/discount

Commodity price fluctuations have a significant impact on the Group’s business. During FY2021, we saw a net positive impact of `1,072 crore on EBITDA due to commodity price fluctuations.

Zinc, lead and silver: Average zinc LME prices during FY2021 marginally increased to US$2,422 per tonne, up 1% y-o-y; lead LME prices decreased to US$1,868 per tonne, down 4% y-o-y; and silver prices increased to US$22.9 per ounce, up 38% y-o-y. The cumulative impact of these price fluctuations increased EBITDA by
`1,243 crore.

Aluminium: Average aluminium LME prices increased to US$1,805 per tonne in FY2021, up 3% y o y, this had a positive impact of `923 crore on EBITDA.

Oil & Gas: The average Brent price for the year was US$44.3 per barrel, lower by 27% compared with US$60.9 per barrel during FY2020. This had negative impact on EBITDA by `1,632 crore.

b) Direct raw material inflation

Prices of key raw materials such as imported alumina, thermal coal, carbon and caustic have reduced significantly in FY2021, improving EBITDA by `1,646 crore, mainly at Aluminium and Zinc business.

c) Foreign exchange fluctuation

INR and SA Rand depreciated against the US dollar during FY2021. Stronger dollar is favourable to the Group’s EBITDA, given the local cost base and predominantly US dollar-linked pricing. The favourable currency movements positively impacted EBITDA by `2,091 crore.

d) Profit petroleum to GOI at Oil & Gas

The profit petroleum outflow to the Government of India (GOI), as per the production sharing contract (PSC), increased by `636 crore. The increase in outflow was primarily due to the lower recovery of capital expenditure in FY2021.

e) Regulatory

During FY2021, changes in regulatory levies such as Renewable Power Obligation etc. had a cumulative positive impact on the Group EBITDA of `744 crore.

f) Volumes

Higher volume led to increase in EBITDA by `907 crore by following businesses:

Zinc India (positive `1,170 crore)

Higher zinc & lead sales (higher by 6% and 20% respectively) & higher sliver sales (~25%), had a cumulative positive impact on EBITDA of `1,170 crore.

Oil & Gas (negative `499 crore)

Oil & Gas business achieved WI sales of 40.27 mmboe, down by 8% y-o-y. This had negative impact on EBITDA of `499 crore.

Iron Ore (positive `251 crore)

Sales volumes at iron ore business increased significantly having a positive impact on EBITDA of `251 crore.

Steel business (positive `28 crore)

ESL achieved metal sales of 1,231 KT, up 4% y-o-y. This sales volume increase had a positive impact on EBITDA of `28 crore.

Aluminium (positive `108 crore)

In FY2021, the Aluminium business achieved metal sales of 1.96 million tonnes, up 2% y-o-y. This volume increase had a positive impact on EBITDA of `108 crore.

g) Cost and marketing

Improved costs resulted in an increase in EBITDA by `1,857 crore over FY2021, primarily due to improved cost at Aluminium business driven by better coal rate and mix and lower alumina imports. This was partially offset by lower premia realizations at Aluminium and Zinc business, impacting EBITDA negatively by `566 crore.

h) Others

This primarily includes the impact of past exploration cost recovery at Oil & Gas business during FY2020 and change in Profit Petroleum (PP) tranche partially offset by higher power EBITDA, inventory and foreign exchange adjustments, impacting EBITDA negatively by `786 crore.

REVENUE

Revenue for the year was `86,863 crore, higher 4% y-o-y. This was driven by higher commodity prices, higher volumes at Zinc India, Copper, Iron Ore and Aluminium business, inclusion of FACOR in FY2021, rupee depreciation, partially offset by lower power sales at TSPL, lower volume at Oil & Gas, Skorpion, and lower cost recovery in FY2021.

EBITDA AND EBITDA MARGIN

EBITDA for the year was `27,341 crore, 30% higher y-o-y. This was mainly on account of higher commodity prices, higher sales realisation at Steel and Iron ore business, higher volumes at Zinc India and Aluminium business, aided by cost reduction at Zinc, Aluminium and Oil & Gas business, higher RPO MTM gains at Aluminium business and rupee depreciation. This was partially offset by lower brent realisation and lower cost recovery in Oil & Gas business.

We maintained a robust adjusted EBITDA margin¹ of 36% for the year (FY2020: 29%)

DEPRECIATION AND AMORTISATIONS

Depreciation for the year was `7,638 crore compared to `9,093 crore in FY2020, lower by 16%, primarily on account of lower charge at Oil & Gas business due to impairment of asset in Q4 FY2020, and Skorpion mine put under maintenance and care at the start of the financial year.

NET INTEREST

The blended cost of borrowings was 7.7% for FY2021 compared to with 7.9% in FY2020.

Finance cost for FY2021 was `5,210 crore, 5% higher y-o-y compared to `4,977 crore in FY2020 mainly on account of increase in average borrowing, decrease in interest capitalisation at Aluminium and Oil & Gas business, partially offset by lower blended cost of borrowings.

Investment income for FY2021 stood at `3,269 crore, 34% higher y-o-y compared to `2,443 crore in FY 2020.This was mainly due to interest on the inter-company loan to VRL, partially offset by decrease in average investments and mark-to-market (MTM) movement at Zinc India.

EXCEPTIONAL ITEMS

The exceptional items for FY2021 was at `(678) crore, mainly on account of loss relating to certain items of capital work-in-progress (CWIP) at the Aluminium and Steel business, provision on receivables subject to litigation, revision of Renewable Purchase Obligation (RPO) pursuant to the Odisha Electricity Regulatory Commission notification, compliance cost for environment clearance at Steel business and settlement of structured investment.

[For more information, refer note [34] set out in P&L notes of the financial statement on exceptional items].

TAXATION

Tax expense for FY2021 stood at `2,180 crore (FY2020: credit of c. `3,516 crore). The normalised ETR for FY2021 is at 27% (excluding tax on exceptional items, tax on intra Group dividend and deferred tax asset of `3,111 crore recognised on losses in ESL) compared to 34% in FY2020, majorly on account of change in profit mix.

ATTRIBUTABLE PROFIT AFTER TAX (BEFORE EXCEPTIONAL ITEMS)

Attributable PAT before exceptional items was `12,151 crore in FY2021 compared to 3,995 in FY2020.

EARNINGS PER SHARE

Earnings per share before exceptional items for FY2021 were `32.80 per share as compared to `10.79 per share in FY2020.

DIVIDEND

Board has declared interim dividend of `9.50 per share during the year.

SHAREHOLDERS FUND

Total shareholders fund as on 31 March 2021 aggregated to `62,277 crore as compared to `54,635 crore as of 31 March 2020. This was primarily net profit attributable to equity holders earned during the year partially offset by dividend paid during the year.

NET FIXED ASSETS

The net fixed assets as on 31 March 2021 were `106,784 crore. This comprises of `13,880 crore as capital work-in-progress as on 31 March 2021.

BALANCE SHEET

Our financial position remains strong with cash and liquid investments of `32,614 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 `7,800 crore as on 31 March 2021.

Gross debt as on 31 March 2021 was `57,028 crore, a decrease of `2,159 crore since 31 March 2020. This was mainly due to the repayment of debt at Vedanta Standalone partially offset by increase in borrowing at Zinc India business and BALCO.

Gross Debt comprises term debt of `53,000 crore and short-term working capital loans of `4,000 crore. The loan in INR currency is 89% and balance 11% in foreign currency. Average debt maturity of term debt is c. 3.2 years as of 31 March 2021.

CRISIL and India Ratings revised the rating of Vedanta from AA to AA- with Stable outlook in FY2021.