Strategic priorities

Areas we focus on to deliver sustained value

Our five strategic focus areas reflect our integrated thinking that connects our purpose with our performance. They help us leverage our strengths, take advantage of opportunities, manage risks and navigate business cycles while taking into consideration the material concerns of our heterogeneous stakeholders. Here we map the progress we have made against each focus area and the way forward.

S1

CONTINUE FOCUS ON WORLD-CLASS ESG PERFORMANCE

We operate as a responsible business committed to Zero harm, Zero Discharge and Zero Waste. Our revised vision is ‘Transforming for Good’ around three focus areas - transforming communities, transforming the planet, and transforming the workplace. Through these focus areas we work towards generating positive values for our stakeholders and minimising the impacts on the environment. We promote social inclusion across our operations to promote inclusive growth.

FY2022 update

  • 12 fatalities occurred in the fiscal year; each of these fatalities was investigated by ICAM methodology with oversight from the Group leadership. Various programmes are in place to avoid repeat incidents
  • Critical risk management is under implementation across the Group to improve workplace safety
  • Climate risk assessment and scenario analysis are carried out for all the businesses
  • Decarbonisation roadmap developed to achieve net carbon neutrality by 2050
  • We have launched Restora, and Restora Ultra India’s first low-carbon aluminium
  • Tailings dam review by an independent third party was completed, and an action plan was created to close the gaps
  • 3,200+ Nand Ghars established

Vision

Transforming Communities

Aim 1 Responsible business decisions based around community welfare

Aim 2 Empowering over 2.5 million families with enhanced skillsets

Aim 3 Uplifting over 100 million women and children through Education, Nutrition, Healthcare, and Welfare

Transforming the Planet

Aim 4 Net-carbon neutrality by 2050 or sooner

Aim 5 Achieving net water positivity by 2030

Aim 6 Innovating for a greener business model

Transforming the Workplace

Aim 7 Prioritising safety and health of all employees

Aim 8 Promote gender parity, diversity, and inclusivity

Aim 9 Adhere to global business standards of corporate governance

Objectives for FY2025

  • Zero fatality, with 2 fatality-free years
  • Stack emissions to be 25% of 2018 levels; all tailing facilities to be audited and actions closed with real-time monitoring
  • All performance standards to be developed, implemented and made part of VSAP
  • Employee and community exposure monitoring
  • Mental health programme to be initiated
  • Achieve zero social non-compliances; become signatories to and participants in VPSHR; set up an external SP advisory body
  • Achieve 20% reduction in GHG emission intensity from a 2012 baseline
  • Ensure that 40% of all new projects have a carbon rating of 4-star and above
  • 29,000 Nand Ghars to be constructed by 2025
  • Skilling and employment creation for 60,000 youths

KPIs

  • Fatalities
  • TRIFR
  • No. of Category 5 social incidents
  • GHG emission intensity
  • No. of carbon star rated projects
  • Compliance tracking
  • Source emissions tracking
  • Personal exposure monitoring
  • CSR footprint
  • Gender diversity

Risk

R1 Safety and health of our employees, BPs and communities

R2 Managing positive community relationships

S2

AUGMENT OUR RESERVES & RESOURCES (R&R) BASE

We look at ways to expand our R&R base through targeted and disciplined exploration programmes. Our exploration teams aim to discover mineral and oil deposits in a safe and responsible manner and replenish the resources that support our future growth ambitions.

FY2022 update

Zinc India (HZL)

  • Total ore reserves stand at 161.2 million tonnes (net depletion of FY2022 production of 16.3 million tonnes) at the end of FY2022 (150.3 million tonnes at the end of FY2021) due to heightened focus on resource to reserve conversion during the year. Exclusive Mineral Resource totalled 286.73 million tonnes
  • Combined R&R was estimated to be 448 million tonnes, containing 31.1 million tonnes of zinc-lead metal and 874.7 million ounces of silver
  • Overall mine life continues to be more than 25 years

Zinc International

  • Combined mineral resources and ore reserves estimated at 671 million tonnes, containing 35.0 million tonnes of metal

Oil & Gas

  • Seismic acquisition in Assam, Cambay, and Rajasthan for OALP blocks
  • Exploration and appraisal wells drilled across PSC and OALP blocks
  • Two hydrocarbon discoveries in Rajasthan (KW-2 Updip and Durga -1) and one in Cambay (Jaya-1) have been notified as Oil & Gas discovery
  • Strategic alliances with global players like Halliburton, Schlumberger, and Baker Hughes with the aim to increase R&R across the portfolio
  • Shale studies to unlock the potential in Barmer basin
  • Gross proved and probable R&R of 1,151 mmboe

Objectives for FY2023

Zinc India

  • Target generation at Kayad and RA by integrating application of AI & ML with existing geological data
  • Exploration plan to enhance the mineral resource by 20 mt ore with contained metal of 1.0 mt
  • Ore reserves upgradation of 28 mt will lead to total R&R of 470 mt
  • Application of advance geophysics techniques for target generation in strike/down dip extension of mineralisation.

Zinc International

  • Execution of 88 km of drilling across greenfield and brownfield projects in RSA and Namibia
  • Addition of 11.5 mt of ore (1.08 mt metal) and upgradation of 26.5 mt of ore (2.3 mt metal)

Oil & Gas

  • Exploration and appraisal drilling across the portfolio in Rajasthan, Cambay, Northeast and Offshore blocks
  • Drilling pilot wells for shale to establish potential
  • New opportunities basket for execution based on evaluation by global players as part of the strategic alliance
  • Alkaline Surfactant Polymer (ASP) pilot project in Bhagyam and Aishwariya fields
  • Infill wells across operating fields to augment reserve base

Objectives for FY2025

Zinc India

  • Securing SK north/SK south PL and other new tenements for R&R growth
  • Target generation through application of AI & ML along with advance geophysics
  • Enhancement of the mineral resource by 40 mt ore with contained metal of 2.0 mt and upgrade ore reserves to 42 mt, which will lead to total R&R of 500+ mt with ~35 mt metal

Zinc International

  • Execution of 100 km of drilling across greenfield and brownfield projects in RSA and Namibia
  • Addition of 25.0 mt of ore (2.2 mt of metal) and upgradation of 27.0 mt of ore (1.9 mt metal)

Oil & Gas

  • Establish the resource pool around OALP blocks to have incremental development opportunities in the portfolio
  • Establish commercial potential of shale
  • Establish the full potential of ASP in Bhagyam and Aishwariya for commercial development

KPIs

  • Total R&R in Zinc India and ZI
  • Total 2P+2C R&R in O&G

Risk

R1 Health, safety and environment (HSE)

R5 Discovery risk

R9 Regulatory and legal risk

S3

OPTIMISE CAPITAL ALLOCATION AND MAINTAIN A STRONG BALANCE SHEET

Our focus is on generating strong business cashflows and maintaining stringent capital discipline in investing in profitable high IRR projects. Our aim is to maintain a strong balance sheet through proactive liability management. We also review all investments (organic and acquisitions) based on our stringent capital allocation framework to maximise shareholder returns.

FY2022 update

  • Free cashflow (FCF) improvement from `13,821 crore to `21,715 crore, up 57% y-o-y
  • Net Debt (ND) decreased from `24,414 crore to `20,979 crore.
  • Net Debt/EBITDA at 0.5x on a consolidated basis
  • Dividend worth `16,728 crore, `45/share distributed in VEDL .

Objectives for FY2023

  • Generate healthy free cash flow from our operations
  • Disciplined capex across projects to generate healthy ROCE
  • Improve credit ratings
  • Reduce working capital

KPIs

  • FCF post-capex
  • Net Debt/EBITDA (Consolidated basis
  • EPS (before exceptional items)
  • Interest cover ratio
  • Dividend

Risk

R9    Regulatory and legal risk

R10 Tax related matters

R11 Fluctuation in commodity prices (including oil) and currency exchange rates

R13 Access to capital

S4

DELIVERING ON GROWTH OPPORTUNITIES

We are focused on growing our operations organically by developing brownfield opportunities in our existing portfolio. Our large, well-diversified, low-cost and long-life asset portfolio offers us attractive expansion opportunities, which are evaluated based on our return criteria for long-term value creation for all stakeholders

FY2022 update

Zinc India

  • Total mine development increased by 10% to 107 km in FY2022
  • Successfully conducted public hearing at Zawar to obtain EC for 6.5 mt capacity
  • Hoisting capacity increased at Rajpura Dariba from 0.9 to 1.3 mtpa
  • Crusher 2 commissioned at Rampura Agucha
  • Highest ever mined metal production at 1,017 kt in FY2022
  • Highest ever refined metal production at 967 kt in FY2022
  • Completed all turbine modifications in the CPP plants, thus increasing power generation capacity by 35 MW while reducing specific coke consumption

Zinc International

  • Significant ramp up in Gamsberg production with 170 kt zinc MIC in FY2022

Oil & Gas

  • Exploration drilling ongoing across basins. Hydrocarbon discovery notified for Durga -1 in Rajasthan and Jaya-1 in Cambay during the year. Till date, three hydrocarbon discoveries have been notified under the OALP portfolio
  • Infill drilling in Mangala, Tight Oil (ABH), Tight Gas (RDG), Satellite Field (NI) and Offshore (Cambay) to augment reserves and mitigate natural decline
  • 38 wells drilled across all assets

Aluminium

  • Ramp up of Jharsuguda facility
  • Debottlenecking of JSG Billet facility from 400 ktpa to 460 ktpa

ESL

  • Record annual hot metal production of 1.3 mt since acquisition, up 6% y-o-y

Facor

  • Highest ever annual chrome ore production at 250 kt since acquisition, up 70% y-o-y
  • Highest ever annual ferro chrome production of 75 kt, up 10%y-o-y

Objectives for FY2023

Zinc India

  • Ramp up of underground mines towards their design capacity of 1.2 mn mtpa
  • Combined paste-fill and dry tailing plant at Rajpura Dariba, which will help increase ore production from 1.2 mtpa to 2 mtpa
  • New beneficiation plant to start at RDM to increase treatment capacity from 1.1 mtpa to 1.5 mtpa
  • Addition of new production centre from from Purvanchal in Zawar mines
  • Migration to 100% mechanised charging at Zawar leading to improved safety, faster charging, increased pull per blast
  • Construction and commissioning of new ZLD plant at Agucha and Zawar
  • With the supporting MIC flow, smelters are geared to touch approximately 1,000-1,025 kt
  • Capacity expansion plans awaiting Board approval to include one more roaster in our smelting operations and expand our leeching and cell house capacity subsequently
  • Commissioning of Fumer to be completed during the year

Zinc International

  • Gamsberg Phase 2 project approved by the Board includes mining expansion from 4 mtpa to 8 mtpa and construction of new concentrator plant of 4 mtpa, taking the total capacity to 8 mtpa. MIC production to be 200 ktpa, taking the total South Africa production to >500 ktpa. Target date of completion of project is 18 months
  • Skorpion Refinery conversion – awaiting confirmation of power tariff before beginning onground execution in FY2023
  • Black Mountain Iron Ore project to recover iron ore (magnetite) from the BMM tailings on track. Best quality iron ore will be produced from the new plant with Fe grade >68%. First production is expected in August 2022, 76 kt planned for Q2 and full production from Q3

Oil & Gas

  • Exploration and appraisal drilling in OALP and PSC blocks to unlock resource potential
  • Monetisation of discoveries notified in OALP blocks
  • Partner with global technology leaders to unlock the potential of unconventional resources like shale
  • Commence Alkaline Surfactant Polymer (ASP) project execution in the Mangala field to monetise reserves
  • Infill well projects across producing fields to add reserves and mitigate natural decline

Aluminium

  • Lanjigarh expansion from 2 mtpa to 5 mtpa
  • JSG VAP expansion to 1.6 MTPA and Balco VAP expansion to 1.1 MTPA. To be completed by Q2 FY2024
  • Operationalise 2 of 3 coal blocks

ESL

  • Embark on the expansion journey from 1.5 to 3.0 mtpa
  • To be a steelmaker amongst the top quadrant EBIDTA percentile group

Facor

  • Expansion of mines from current capacity of 250 kt to 390 kt
  • Metal capacity addition of 60 ktpa through new 33 MVA furnace

Objectives for FY2025

Zinc India

  • Ramp up of underground mines to reach 1.3 mtpa capacity
  • Commissioning of second open pit portal at RAM
  • Commissioning of vertical conveyor at SKM to mine high-grade shaft pillar area
  • Transition to 50% BEV deployment at RA and SK mines
  • Completion of Mill 3 at Zawar to increase beneficiation capacity
  • Establishment of new tailing dam at Zawar mines
  • Commissioning of 150 kt new zinc smelter to achieve 1.25 mn mt metal capacity and 1,000 mt silver production
  • Commissioning of second Fumer
  • Waste management through Jarosite utilisation in cement industry by modification in present circuits
  • Establishment of 200 MW green power to reduce cost of production and meet our ESG and Net Zero goals

Zinc International

  • Full ramp up of Gamsberg Phase 2 project in FY2025
  • Completion of Skorpion refinery conversion project expected by FY2025
  • Gergarub mining and concentrator plant planned to be in production by FY2025, delivering MIC of 100 ktpa
  • Gamsberg Smelter to treat all zinc concentrate from current operation; first production planned in FY2026. First phase planned to produce 300 ktpa
  • Iron ore phase 2 – construction of additional plant to treat 2 mtpa of current tailings storage facility with opportunity to construct a pig iron plant

Oil & Gas

  • Complete the execution of ASP project at Mangala to deliver incremental volume
  • Monetisation of discoveries from OALP and PSC blocks
  • Commence ASP project execution in the Bhagyam and Aishwariya field to monetise reserves
  • Commence shale monetisation

Aluminium

  • BALCO 414+ ktpa
  • DBNK Lanjigarh Refinery expansion from 5 mtpa to 6 mtpa
  • 100% value-added product portfolio
  • Operationalisation of all 3 coal blocks

KPIs

  • Revenue
  • ROCE
  • FCF post-capex
  • Growth capex

Risk

R8    Cairn-related challenges

R9    Regulatory and legal risk

R12 Major project delivery

S5

OPERATIONAL EXCELLENCE AND COST LEADERSHIP

We strive for all-round operational excellence to achieve benchmark performance across our businesses by debottlenecking our assets to enhance production, supported by improved digital and technology solutions. Our efforts are focused on enhancing profitability by optimising our cost and improving realisations through prudent marketing strategies.

FY2022 Update

Zinc India

  • Record ore production of 16.3 mt, despite disruptions on account of COVID-19
  • Mined metal production of 1,017 kt and refined zinc-lead production of 967 kt
  • APC commissioned at beneficiation plants of Rampura Agucha and Sindesar Khurd mines
  • HIghest ever production from Dariba Zinc (DSCZ) with current efficiency at 92%
  • Cell house revamp at Zinc Smelter Debari (ZSD) completed and production increased from 240 mt/day to 270 mt/day
  • We have also and are continuing zinc oxide treatment at Fumer Circuit CLZS for additional FG production of approx. 15-20 kt

Zinc International

  • BMM achieved production 52kt production in FY2022
  • Gamsberg ramped up significantly with 170 kt production in FY2022 and best performances in ore milled tonnes, mill throughput and plant availability. About 81% recovery achieved during March 2022 with a 600 t-650 t/day production to establish run rate of 18 kt-20 kt
  • Skorpion remained under care and maintenance following geotechnical instabilities in the open pit

Oil & Gas

  • Average gross operated production of 161 kboepd for FY2022, down 1% y-o-y, owing to natural field decline
  • Injection of a more efficient and thermally stable polymer – Acrylamide Tertiary Butyl Sulfonic (ATBS) acid commenced in Mangala field
  • Commenced engagement of partners for end-to-end management of Operations and Maintenance (O&M) across assets to leverage expertise, introduce best-in-class practices and adopt digitalisation

Aluminium & Power

  • Record aluminium production at 2,268 kt, up 15% y-o-y driven by ongoing JSG ramp-up
  • Highest ever VAP sales at 911 kt, 21% increase y-o-y
  • First in India to manufacture low-carbon aluminium under the brand name Restora with two product lines
  • Record alumina production at Lanjigarh refinery at 1,968 kt, up 7% y-o-y
  • Alumina COP up by 24% y-o-y due to input commodity headwinds
  • FY2022 COP for aluminium US$1,858 per tonne, up by 38% y-o-y, due to input commodity headwinds mainly coal and carbon
  • Booked 15.3 mt of coal in Tranche V at competitive price for the next 5 years

Steel

  • Increased net sales realisation from US$488 per tonne in FY2021 to US$660 per tonne in FY2022

Facor

  • Increased EBITDA margin by three-fold to US$534 per tonne for FY2022 against US$176 per tonne in FY2021

Copper and Iron Ore

  • Produced 5.4 million tonnes of saleable ore in Karnataka, up 8% y-o-y
  • Revenue increased to `6,332 crore, 40% higher y-o-y mainly due to increase in sales volume and higher realisations at Karnataka & VAB during the year
  • EBITDA increased to `2,279 crore compared to `1,804 crore in FY2021, mainly due to improved margin at Karnataka and higher volume at Karnataka & VAB
  • Continued engagement with the government and local communities to restart operations at Goa and Tuticorin

Objectives for FY2023

Zinc India

  • Sustain COP at low level through efficient ore hauling, higher volume and grades and higher productivity through ongoing efforts in automation and digitalisation
  • All cellhouse operations at 92% current efficiency without any interruption of MIC
  • Pyro to be run on lead mode to reduce the zinc COP and improve lead and silver production

Zinc International

  • Ramp up Gamsberg to design capacity of 250 ktpa in H1 FY23
  • BMM debottlenecking plant 2 mt resulted in similar production levels despite low grades
  • Restart Skorpion post completion of geotechnical studies and feasibility completion of imported zinc oxides

Oil & Gas

  • Manage natural decline through near infill well program across fields
  • Establish the full potential of ATBS in the field to generate incremental value
  • Stabilise end-to-end O&M across assets with partners and deliver value accretion
  • Continue to operate at a low cost-base and generate free cash flow post-capex

Aluminium

  • Production at Lanjigarh refinery of around 2.0-2.1 mt, with aluminium production at smelters around 2.2-2.3 mt
  • Hot Metal COP at low level
  • Improve raw material security and materialisation locally (bauxite & coal); start Jamkhani and Radhikapur (West), acquire bauxite mines through competitive bidding
  • Increased focus on asset integrity and optimisation, quality and innovation and digitalisation through Centre of Excellence

Copper & Iron ore

  • Continue engagement with the government and relevant authorities to enable restart of operations in Goa and Tuticorin
  • Increase footprint in iron ore by continuing to participate in auctions across the country, including Jharkhand
  • Advocacy for removal of E-auction/trade barrier in Karnataka

Steel

  • Ensure business continuity with greater focus on reliability centred maintenance
  • Obtain clean, Consent to Operate, and environmental clearance
  • Raw material securitisation through long-term contracts; approaching FTA countries for coking coal

Facor

  • Installation of Waste Heat Recovery system and refractory relining in 45 MVA furnace.
  • 100 MW power generation and sale of additional power.
  • New COB plant commissioning with enhanced capacity of 50 TPH.

Objectives for FY2025

Zinc India

  • Sustain COP at low level through efficient ore hauling, higher volume and grades and higher productivity through ongoing efforts in automation and digitalisation
  • Automation of Debari cell house to reduce cost and increase efficiency and recovery
  • Mechanisation of Dariba Lead Cellhouse to reduce cost and increase efficiency and recovery

Zinc International

  • >500 ktpa production from South Africa at a low cost of production
  • 150 ktpa metal production from Skorpion

Oil & Gas

  • Increase production from existing assets through use of leadingedge technologies, large-scale artificial intelligence and machine learning (AI-ML) enabled base.
  • End-to-end output-based O&M model
  • Continue to operate at a low cost-base and generate free cash flow post-capex

Aluminium

  • 100% backward and forward integration: 3 mtpa aluminium, 6 mtpa alumina, 100% VAP, 100% coal (captive + linkage)
  • Hot Metal COP at lower level
  • Continued focus on quality, asset reliability and optimisation, digitalisation, innovation and R&D

KPIs

  • EBITDA
  • Adjusted EBITDA margin
  • FCF post-capex
  • ROCE

Risk

R1    Health, safety and environment (HSE)

R3    Tailings dam stability

R7    Loss of assets or profit due to natural calamities

R11 Fluctuation in commodity prices (including oil) and currency exchange rates