Company Overview of VEDANTA RESOURCES

wholeiance Overview of VEDANTA RESOURCESINTRODUCTIONVedanta options is the first Indian attach to to be listed in the London stock exchange in December 2003. It is an FTSE 100 alloys and digging familiarity with its headquarters located in London, UK and is Indias largest non ferrous corporation establish on their r planeues. The political party is principally situated in India, although they switch possessions and trading trading operations in opposite locations such as Zambia and Australia. Vedanta Resources is primarily invested in hair, zinc, aluminum pipelinees, however the club is now adding to their portfolio by diversifying into a commercial mogul generation melodic phrase.The crowd has experienced a signifi trickt ripening in juvenile years on grounds of diverse expansions in enters owe to a population class resource base containing bullshit, zinc and aluminum, the impression of this macrocosm the acquisition of Sesa Goa in April 2007, which en abled them to penetrate into the push ore market. Therefore the shaping is affectively participating in the iron ore, zinc, aluminium and copper businesses.Vedanta has a precise vision and mission statement, vision being to be work out and committed so that they might become the market leaders in the non- ferrous market segment and their mission is to be a broken cost, million-ton per annum producer, the ultimate goal however is to make the comp any(prenominal) a success, gratuitous to say that such a mission will receivedly frame in India on a global competitive plat direct, in the metals and exploit segment.The keep alliance has incessantly demonstrated that they argon able to bring in projects that ar of eminent significance thereby contri soloing unmatched step-up at minimum pricing while ensuring high returns to all their sh beholders. in deal manner, the organization makes certain that they meet the high conservative standards that argon set, so that unjustifiable numbers are not shown in their balance sheets.Vedanta Resources chain reactors with a diverse portfolio of mine and metals business as they make available eminent proceeds to their shareholders even as they make sure that they are complaisantly and environmentally accountable, as the instruction keeps track of their employees health and refuge, community issues and of their surroundings.Several of Vedanta Resources operations are authorized by foreign Management Systems Standard ISO 14001, proof of it being the many selects won by the phoner such as cognition of Commitment Award from the plant of Internal Auditors, USA in 2005, Vedanta Resources being the besides manu positionuring high society out of a total of four Indian companies to gift ever received this allot, not to mention the numerous gum elastic and environment awards.To quote the chairman of Vedanta Resources, Mr.Anil Ag naked as a jaybirdal India is a fast-emerging and attractive resource destination, and we imagine our strategy and business objectives will harness Indias high- choice wealth of mineral resources at utter costs of victimization, positioning it as a leader on the global metals and excavation map.ORGANIZATIONAL STRUCTUREVedanta is an emerging multinational heterogeneous with many overseas operations. Its organizational structure is a complex bingle with many subsidiaries, governing display panel and a worry charge. The governing mesa consists of executive and non executive directors. The executive board of directors consists of Mr. Anil Agarwal, Mr. Navin Agarwal and Mr. M S Metha. Mr. Anil Agarwal founded the follow and is leading the alliance as the executive chairman. Mr. Navin Agarwal is the replacement executive chairman of Vedanta and looks later on the corporate business strategy and responsible for(p) for overall performance and growth. He overly heads the executive committee. Mr. M. S. Metha is the chief executive officer of V edanta. He join the conglomerate in the year 2000 and previously was working at Lloyds Steel Industries.The non executive board consists of Mr. Naresh Chandra, Mr. Aman Metha and Mr.Euan Macdonald. Mr. Naresh Chandra was a Padma Vibhushan award winner from the Government of India and he is an Indian Administrative Service officer. He joined the convention in 2004 after holding many prestigious positions in India. Aman Metha overly joined the keep company in 2004. Before that he was the CEO of HSBC. Euan Macdonald was the chairman of SBC Warburg India and specializes in emerging market finance.The management committee is lead by Mr. Navin Agarwal and consists ofCOMMITTEEDESIGNATIONTARUN JAINPRESIDENT build out HUMAN RESOURCESDD JALANWHOLE TIME theatre director CEO ALUMINIUM personal line of creditMS METHAWHOLE TIME DIRECTOR BALCOP K MUKHERJEEDIRECTOR OPERATIONS KCMDILIP GOLANICOO HZLRAJAGOPAL K. KUMARCEO COPPER ZINC BUSINESSAKHILESH JOSHI address MANGT ASSURANCE FUNCTIO NJ. JANAKARAJCEO VEDANTA RESOURCESPRAMOD SURICEO IRON ORE BUSINESSM SIDDIQICFO VEDANTA RESOURCEDA THIRUNAVUKKARASUDOF STERLITEVedanta Resources plc. is the parent company with many subsidiaries operating in different welkins in different names. Vedanta has affairs in five main businesses. separately business is operated by one of its subsidiary. Be commencement is the Vedanta resources plcs group tree. dogshit championshipcopper business are run and operated by Sterlite Industries (India) circumscribed, Konkola Copper Mines Plc and Copper Mines of Tasmania, however, Vedanta holds 53.9%, 79.4% and 100% bet look onively and management control in the in a higher place companies. The total copper business has an annual employment of 678,412 tons and generates tax income of $4,012 million. The end products are the Continuous Cast Rods and Copper Cathodes. Copper from the copper mines are smelted exploitation ISA lick, one of the worlds leading engine room in copper smelting. They throw off the latest version of CS 3000 Distributed Control System of Yokogawa from japan to control the entire copper smelter. aluminium BusinessBharat Aluminium Company Limited (BALCO) and Vedanta Aluminium Limited (VAL) are responsible for Aluminium business. Aluminium business has a total production capacity of 500,000 tons per annum. Vedanta has the authoritative poles of 70.5% in VAL and Sterlite, the subsidiary of Vedanta owns a stake of 51% and exercises management control. Currently the Aluminium business is low vigorous expansion and by 2012 it would become top five Aluminium producers in the world. The company produces metallurgical grade alumina and Aluminium ingots, billets and bars mathematical functiond for making buses. The Aluminium smelter used the advanced technical specifications of British Standard Institute (BSI). The company has bagged OHSAS 18001 certification for good health and protection standards. VAL unit has obtained ISO 9001 and ISO 14001 ce rtificates for quality production and management practices. These Aluminium complexes as well have integrated provide plants in them.Zinc businessZinc business is wholly have and operated by Hindustan Zinc limited (HZL). Vedanta own 64.9% of share capital in HZL. It has an annual production of 9,64,000 tons of zinc that generates tax revenue of $1,782 million. HZL is the worlds integrated morsel largest producer of Zinc and Lead. Apart from Zinc and Lead the plant also produces Silver, Cadmium and generates mogul. Silver and Cadmium are obtained as a byproduct of Lead and Zinc metal appraiseively. The equity shares of HZL are traded at the Indian stock exchange. The metals are refined and sold according to their quality.Iron ore businessThe whole iron ore business is operated by its subsidiary Sesa Goa limited. Vedanta has a haughty stake of 57.1%. The company makes iron ore, pig iron and metallurgical coke. The company has a production capacity of 21.4 million tons of iron ore fines and lumps which generates revenue of $1221.7 million. Apart from these they also sell the in-house technology for coke making. They found parvenue technology using vibro compaction to stabilize char before using in the furnace for firing. Sesa Goas mines have ISO status for good management standards and safety.Commercial forefingerfulness Generation businessThis is a new business pretend for Vedanta group and is run by its subsidiaries Sterlite Energy Limited (SEL) and Madras Aluminium Company Limited (MALCO). SEL is a 100% subsidiary of Sterlite Industries Ltd. As of now the excess condition from its versatile plants are sold. Specialized commercial power generation plants are being set up in India. By the end of 2011 the power plants would become fully operational. Two plants are being set up with a combined generation of 4380MW per year.OPERATIONS OF VEDANTA RESOURCES PLCCORPORATE STRATEGYSince its internalization in 1976, Vedanta has been rattling successful i n its operations. The current turnover of company is $ 7931 million. The success can be owed to the corporate strategy of Vedanta which can be explained as followsOrganic DevelopmentThis includes developing organizations own capabilities. It is through with(p) by making using of latest technology for manufacturing processes spreading coronations over a time, venturing the scope of entry in new markets, analyzing the king of the company to wear them and then enter into such markets.Latest Technology for Mining Smelting trading operations Vedanta has been doing it by using highly advanced technology for manufacturing and designing. This helps in cut back the production costs and thereby gaining profit to compete in the market. For e.g. The Sesa Goas aggroup did a detailed experimentation involving studies on the temperature profile of the oven and redesigning the refractories. Followed by the magisterial plant trials, it developed energy reco genuinely coke making, an enviro nment-friendly technology that is characterized low capital and operating cost, high energy recovery and capable of producing high quality metallurgical coke.Implementing cost reduction techniques Vedanta has signed long-term contracts with suppliers of raw seculars. This not only reduces production costs but also accounts for the round-the-clock availability of resources without getting affected by market fluctuations.Launching Brownfield and Greenfield Projects These form a very important shape for a mining industry. Brownfield projects are abandoned sites that are available for industrial or commercial reuse. The development or expansions of such land is much difficult owing to contaminant by earlier use. Greenfield projects are the ones which lack any constraints im constitute by prior work. There is no posit to demolish or reconstruct the structure. Vedanta has been investment blood lines in Brownfield and Greenfield projects for expansions. A 1.4 mtpa aluminium refine ry project at Lanjigarh and an aluminium smelter of capacity 500,000 tpa both in state of Orissa, India are a few(prenominal) of the Greenfield projects launched by the company.Entry in New Market withal the company has now ventured into Commercial Power Generation. It recognised the tremendous scope in the industry for commercial power generation, in India. It has therefore started commercial power generation plants in Chhattisgarh and Orissa. Also these plants are locates at strategic positions, in general in the coal rich zones of India, thereby facilitating transport and easy availability of coal.Consolidation of Group StructureAs shown preceding(prenominal), Vedanta has many subsidiaries like KCM, Sterlite Industries India Ltd, Sesa Goa Ltd and so on Although it has the Holding Stocks and management control over all these, both(prenominal) of the stakes are owned by buck private investors. Vedanta is constantly seek to buyback it stock and purchase shares of all its sub sidiaries. This would help in a fused group structure. The main advantage of it is ease in the management decisions.Mergers and AcquisitionsSince 2004, the Vedanta Resources had only one acquisition till date by acquiring the Madras Aluminium Co Ltd. While taking stake into consideration the Vedanta resources taken over 5 companies till finalization of balance sheet for 2010. Acquisitions include Konkola Copper Mines Plc. in 2004 and part in 2009 with a total of 79.4% stake, next Sterlite princely Ltd and Finsider International Co Ltd both in the year 2007. Moreover, the company raised roughly 25.8% by the outstanding common shares of Sterlite Gold on a fully-diluted basis. Also the company acquired Finsider International Co Ltd. Fully from a Japanese company called Mitsui Co at around USD 981 million. In the year 2009 the company acquired 51% of Sesa Goa Ltd, Indias largest producer- tradeer of Iron-Ore in the private sector at INR 4070 Crore.Now, the Vedanta Resources are pla nning to acquire 60% stake in Crain India Company. The Cairn India is a leading imposter in Oil and Gas industry in India. Moreover, Crain India is one the biggest private exploration and Production Company currently operating in India. Edinburgh establish Crain Energy is holding a total of 62.37 percent stake in Crain India. According to the deal the Crain Energy will sell its stake to Vedanta Resources Plc for the deal amount of USD 9.6 trillion at 405 INR per share.Successful acquisition of KCM, MALCO, Sterlite Gold Ltd and Sesa Goa has added hearty growth to the Vedanta as a whole. They are continue looking for a new growth and acquisition opportunities in the metal and mining sector and related opportunities in India and elsewhere. They are taking all these steps by keeping government privatization programmed in mind.PESTEL ANALYSISPolitical LegalAs minerals are a nations wealth, the mining industry operates under the huge tarnish of political and legal push. Mainly they a re state owned or nationalized and involves a large and complicated process for licensing. The industry is very a lot regulated by governmental law that mainly focuses on beat back and environmental factors. In the fresh days, the increasing concern for environmental issues has do the government to pressurize the mining policies. Upon this the media focus is passive more an added pressure for the mining industry. Even though the governments policies are mainly aimed to protect the resources but they also encourage exports by giving subsidies and encourage new technology developments.EconomicMining is an industry that requires very high capital investment. Thus, interest rates make a study(ip) impact. Not all countries are rich in deposits of minerals hence mining generally involves import and export of products. The exchange rates fluctuations are a dominant concern. The import taxes and internationalist trade cycle are also important economic factors for the mining industry. friendly being an industry that impacts the surrounding environment in areas of its operation, the escort of the local community is of the close important and underlying factors for mining. Mining, though, a resource based industry, cannot be carried out in areas of high population because of the concerns that it may affect the man health. Mining has also been under the scanner of various activist groups over the recent years. The industry thus has also been attracting continuous media attention. Vedanta has been attracting a lot of media attention recently over ESG issues.TechnologyThe process involved in the mining industry right from the raw material transportation still export involves risky process. In those conditions the laws prevent the use of benevolent resources that make the mining industry heavily depen crack on technology. Recently the mines are using computerized machines that operates according to its program and automated car transporter belts to reach its s pecified destination i.e. harbor or warehouse. But still the underground mining relies mainly on human resource receivable to its complicated constitution of mining.EnvironmentalMining is an industry that affects and makes a damaging impact on the environment during and after the process. Thus any mining activity has to go through a number of clearances and regulations concerning the environment. Almost all countries demand an investigation of its impact on the environment before any activity can start.PORTERS 5 FORCES ANALYSISThe pastime diagram gives the 5 Forces Analysis for Vedanta ResourcesThreat of New Entrants The threat of new entrants to Vedanta is very low. This is mainly because of high capital investments inevitable. The limited resources in mining and the costs of exploration, the various government laws, the equipment required, additional costs incurred in rehabilitation of people existent at mining sites etc all make it difficult for new entrants to venture in t his industry.Threat of Substitutes The threat of substitutes also is low. This is mainly because metals are required basically for all types of manufacturing industries as an input. Even if substitution is considered, it has limited scope. Also the price/performance ratios of iron, aluminium etc is low, making the threat of substitutes even less. talk terms Power of Suppliers The suppliers include the suppliers of raw materials required, that of equipment etc. There are very few suppliers and therefore their bargaining power is high. Also the cost of replacement suppliers is high making it difficult to do so. Vedanta has entered into long term contracts with their suppliers, thus reducing the costs. It also ensures that Vedanta get supply of goods without being affected by market fluctuations.Bargaining Power of Buyers This is low as the demand of the metals and metal products is very high. Also switching costs are high as the costumers normally have contracts with the company.Comp etitive Rivalry Some of the competitors of Vedanta Group are Rio-Tinto, BHP Billiton Ltd, Grupo-Mexico, Hindalco etc. The competition is intense as every player is trying for their market share as the resources are becoming restricted and limited. rig out ANALYSISA complete SWOT analysis of Vedanta Resources plc would provide a clear and unbiased strategic analysis of the companys strengths and weakness and emf opportunities and threats, this sort of analysis helps the business in understanding its partners, customers and competitors better.STRENGTHS The strength can be determined by the fact that the company has assets that are global with respect to both scale and size their low cost of production which makes the group competitive among its peers and the skill and experience that are incorporated in the nature of their assets is of high quality. Their recent growth in volume and the many measures that the group have taken in reducing costs has increased their exchange flow consi derably The Company understands the fact that it is important to maintain a low leverage by enabling adequate liquidity and group meeting all their financial obligations, possessing a strong vision, making strategic acquisitions and having an ability to think ahead. They also understand the value of their employees which is a competitive advantage as its not easily reproducible like technology and the fact that they strive for excellence has only increased their strength.WEAKNESSES Poor brand management, not giving importance to marketing of the company, keeping silent while a swarm of people accusing the company has increased trouble for the company. Therefore, the company must make all efforts in order to correct the line of work before they run out of business and need to curtail their operations.OPPORTUNITIES The opportunities for the group are many, success in the group will allow the company to compete globally. Several efforts are made by the company with respect to expansi on of the company and growth and this can be clearly seen in the group on having acquired Sesa Goa, which makes it possible for the company to penetrate through the iron ore market and by making strategic decisions, will guarantee that Vedanta Resources triumphs.THREATS The potential threats as reported by The Independent news paper is the fact that the human rights protestors that stood outside the companys building in their avatar costumes, outshone the companys accomplishments which is a major threat to the companys image. The backing out of the perform of England only six months after researching into the company or Aviva who is one of their backers, who voted against them in three resolutions in board meeting which they attended. Vedanta however, denies the rumors concerning the taint of Lanjugarh, or any breach in human rights, the encroachment of land in Nyamgiri Hills in Orissa and any other accusations that have been made against the company and they continue to contest a ny allegations made against the group. Although the rumors are overtaking their defensive stand and is causing a serious dent to the Vedanta Groups image. (The Independent, 2010)COMPETITIVE ADVANTAGEIn terms of the competitive advantages for Vedanta resources Plc, Firstly, they have a mining site located where the availability of innate(p) resources is high. Their production is done on the basis of the accessibility of the raw material. As the natural resources are highly available, the supply of the raw material and the cost of production can be low, and the cost of capital can be divided to observe it in the current market.The raw material in the industry is zipper but the resources held by the group and as they located where there is a rich source of natural resources, not to mention the availability of chintzy labour at their mining site which results in Vedanta having a low cost of production per unit leading the company to win an award for the low cost of production in yea r 2007. Culture of the ordering where there are located, is also well known by them so the adjustment to the market environment would not be an issue placing the company is a very advantageous positionThe company has also started their operations in power production unit. They had produced the power sufficient enough for their production and the excess production was sold out and this resulted to the investment in a power generation plant. Now they have obtained blocks for 112.2 million tons with the ministry of coal. They have signed a contract with Chhattisgarh government for the interested thermal and coal power generation plant for 1200 MW power capacity.India is fifth largest in the world for the bauxite with the reserve about of 2,600 million tones and for the coal reserves and for iron ore it is sixth. The most of the mining and smelting site for Vedanta resources are in India. This is advantageous for potential growth in the further prospective for the company.CORE COMPETEN CEFor Vedanta the result competence of their business strategy is developing low cost, with inexpensive skilled and amend labour. (Business Standard, 2008) In the mining industry, the high costs are to do with the investment in acquiring a mining site and costs need for production. However, Vedanta has reduced its cost of production owing to their location, which is rich in natural resources. The current production for the Aluminium is 1.4 mtpa which is planned to be increased by 6,00,000 tpa to reach is total production of 2 mtpa. The company aims at investing $ 9.8 Billion by which they will be the fifth mining company for Aluminium metal.CORPORATE SOCIAL RESPONSIBILITYIn the present-day business scenario, Corporate Social business (C.S.R.) and sustainability have become a very high-profile agendum in many countries and industries. Thus, imputable to the nature of its business, Corporate Social Responsibility is a pretty confound and complicated issue for Vedanta Resources Pl c. The company has quite a mixed record on the social responsibility front. Nonetheless, the company has made certain valiant efforts to conduct their business in a socially responsible manner.Vedantas current C.S.R. agenda acknowledges the responsible management of the Environmental, Community, Health and Safety and Employee issues with respect to all of their operations. The companys Health, Safety and Environment (H.S.E) management theoretical account administers the healthy and sound management of its operations. According to its current agenda, the company aims to reduce the impact of its activities on the environment. Efficient consumption of energy and irrigate and use of recycled materials is one of its main motives. It has taken initiatives through its subsidiaries to fulfill its motives. Being a mining company, the health and safety of its employees and the community is a core concern for Vedanta. The company has a Health and Safety management framework and policies in p lace, which aim to ensure a risk-free environment for its employees. Vedanta has also taken efforts to support and enhance the local community in the areas of their operations. Sterlite universe is financially supported by the group, which provides free computer training to the progeny under-privileged people. The company has also made several contributions and bequests to the community. For example being the donation of US$1.1 million to the Rajasthan drought relief fund, through its subsidiary H.Z.L. disrespect making certain efforts to conduct its business in a socially responsible manner, Vedanta has been engulfed in a web of allegations concerning this issue over the decision few years. The company has been under immense criticism for having a ugly human rights and environmental record by various activist groups and authorities. A human rights group called Amnesty International, has criticized and raised the issue of ill intercession of the local tribal people by Vedanta in the Niyamgiri hills in Orissa, India. conglomerate other activist groups have also accused Vedanta and its subsidiaries of threatening the nutrition of the community residing in and around the areas of its mines. This also led to recent public demonstrations and protest against the company worldwide. However, the company has maintained a stance that, it would act in a responsible manner and that the proposed project will only enhance the community as a whole in the occurrence area.Vedantas Alumina refinery at Lanjigarh in Orissa, India, has also been critiqued by the State befoulment Control board in India for air and water pollution. Amnesty International has accused Vedanta of failing to curb the impact created by its refinery of air pollution on the local community. The company is also facing investigations and charges regarding pollution because of its project in Armenia. This is another issue that has been raised by various activist groups.The company has also failed to maintain a clear health and safety record recently. Separate incidents have darned its reputation concerning safety efforts. An under construction chimney at its smelter in Chhattisgarh, India collapsed causing close of more than 40 workers and employees. The company has also been accused of safety default as its unsafe mining operations have led to deaths of more than 25 workers and employees and injuries to hundreds of others in 2007.The controversies, sorry human rights and environmental allegations have caused a lot of socially responsible investors to divest from the company. After protests by pick International a human rights group regarding the Orrisa issue, the Church of England sold its stake worth 3.75 million pounds in Vedanta resources on the basis of ethical grounds. The Church stated that we are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect of companies in whom the Church investing bodies hold shares, The Scottish investment firm Martin Carrie Investments also sold its stake worth more than 2 million pounds following protest from activist groups. Other responsible investors like the Swedish Government, Joseph Rowntree likeable Trust, Dutch investment firm PGGM and a few others have joined the bandwagon of disinvesting from the company following its poor recent social record. The BP Pension fund has also reduced its share following similar concerns. The UK and Norwegian governments have also condemned the company. The disinvestment by shareholders has been a major concern for Vedanta as it for sure threatens to affect its growth.On 24th August 2010, the Indian government out of use(p) the companys proposal for a new mine in India alleging Vedanta of having a poor human rights and environmental record. Indias Environment minister stated, There is no emotion, no politics, no prejudice I have taken the decision in a purely legal approach, that these laws are being violated. This has been a major blow for Vedanta as it was planning to invest more than 5 trillion pounds in the Niyamgiri project.The company has also been alleged of charges of bribery in Chennai, India for the reopening of a factory that was shut down due to a major accident. Sterlite, a subsidiary of Vedanta was slapped with tax notice of more than 44 million pounds by the India Excise department in 2010 while a few other legal violations have also tarnished the companys image.All the recent allegations and controversies in the recent times resulted in a negative image for the company. Its stock travel tremendously by more than 200% from April 2009 to April 2010 but after the recent allegations and concerns over disinvestment by investors, the stock has been a sharp decline. Thus, the issue of corporate social responsibility has certainly made an impact on its growth recently and could also be a cause of concern if the company does not adopt new strategies to improve its CSR record. Vedanta must revive its CSR agenda to clarify investor concerns. The company has however claimed that it aims resolve all the issues regarding the allegations and aim to enrich and empower the community wherever they operate.Projects Under ScrutinyLanjigarh Bauxite MineLanjigarh smelteryChhattisgarh Chimney CollapseChennai FactorySourceCONCLUSIONIn final stage Vedanta Resources is Indias largest non-ferrous metal and mining company based on revenue. This FTSE-100 company has a strong balance sheet with cash and liquid investment of $7.2 billion and has cash in excess of $7.0 billion. Moreover, its the only Indian manufacturing company listed at London Stock Exchange. They are working with workforce of 30,000.The analysis shown above certainly explains the success of Vedanta Resources in mining industry. This success can be hugely owed to its corporate strategy. However there are still some glitches in the strategy. This is evident by the SWOT analysis, so also the effects on its business as an aftermath of its weak corporate social responsibility. Therefore it is evident that their current corporate strategy is not sustainable. Although due consideration has been given in asset optimization, reducing costs and thereby gaining profits Vedanta has not given due consideration to the threat posed by its competitors. If any of the competitors enter India, for mining then Vedanta would not be able to survive. Moreover their corporate social responsibility has been lacking this has hard affected their brandmark-name, a very important factor in todays market. It has also resulted in decreased market share and withdrawal from many of their investors like Church of England. Therefore certain changes have to be made in their current corporate strategy.First of all, the company should give due consideration to its Social Responsibility, it should provide rehabilitation facilities to people, who have lost their lands due to mining activities. It should provide safety and security measures for their workers. It should also come with policies that are in accordance with the human right and environment. All this would add up with Brand Image of the company. It should try to improve relations with Indian governm