Vedanta to invest $8 bn in aluminium, zinc, lead and crude oil projects

Investments are planned across aluminium, zinc, lead and crude oil to boost production , Vedanta Chairman, Navin Agarwal, said while addressing shareholders at the company’s annual general meeting on Friday.

Anil Agarwal-owned Vedanta is currently the country's largest private sector oil producer, contributing 27 per cent to the domestic production and aspires to take it up to 50 per cent. Navin Agarwal said his company will invest $3-4 billion in Indian projects in the next 2-3 years.

“As India’s largest private oil producer, the company contributes 27 percent to domestic production and aims to take it up to 50 percent in two to three years,” Agarwal said.

India, he said, currently spends $125 billion on oil imports, which accounts for 80 per cent of its oil needs. 

Vedanta Resources will also be investing $2.3 bn to increase crude oil reserve base by 375 million barrels. 

“There is immense growth potential,” he said, adding, “Entire funding for these projects will be taken up through internal accruals and the capital expenditure won’t increase the debt.”

During the year, the company acquired Electrosteel Steels Ltd., integrating it with the iron ore business. Electrosteel is producing at its full capacity of 1.5 million tonnes per annum, he said, adding it can be ramped up to 2.5 MTPA in the next two years at a nominal capex of $300-400 million. But, Agarwal said, the company is not looking at any acquisition now but will keep an eye out if anything suits its synergies.

In 2017-18, Vedanta’s revenue jumped 22 per cent on a yearly basis to Rs92,900 crore. Earnings before interest, tax, depreciation and amortisation increased 19 per cent from the last year to Rs25,500 crore, while its profit after tax rose 10 per cent to Rs8,200 crore.

Agarwal said there is an urgent need to bring further changes in policies for the natural resources sector, particularly the implementation of the New Mineral Policy, and to ensure a level playing field in terms of imports and duties. Encouraging the exploration and production of natural resources will lead to greater self-reliance, save billions of dollars in imports, generate immense employment opportunities, he added.

Vedanta is the world's second largest integrated zinc-lead producer and the only primary silver producer in India.

"We are also the largest aluminium producer in the country. This year, we had a record production at our zinc-lead-silver and aluminium businesses. We will be further investing $3-4 billion in these businesses in the next 2-3 years," Agarwal said.

But the company’s 400,000-tonne copper smelter plant in Tamil Nadu remains shut after 13 people were killed in police firing at crowds during violent protests against widespread pollution caused by the smelter and the Supreme Court ordered Vedanta to shut down the plant.

The company, he said, also plans to set up a global centre for technical excellence in India.

Vedanta's free cash flow stood at Rs7,900 crore and gross debt came down by Rs8,500 crore. With a contribution of over Rs33,000 crore to the Indian exchequer, the company is among the top two corporate contributors to the exchequer.