Mumbai: Diversified natural resources company Vedanta Ltd today said it will invest ₹55,000 crore across its businesses to increase production by about 50%. The company would fund this investment from internal cash flows.
Addressing shareholders at the company's 54th annual general meeting in Mumbai, Navin Agarwal, chairman, Vedanta Ltd, said, "Looking ahead, we are excited by the prospects in our businesses which include: ramp up in zinc, lead and especially silver production from Hindustan Zinc and the benefit of a full year’s production from our Gamsberg Zinc mine in South Africa; increased production from our oil and gas business as the first phase of our projects comes on stream and continued structural changes to our cost structure in the aluminium business while increasing volumes."
Vedanta, the largest primary producer of aluminium in the country, plans to increase the production by 50% taking it up to 3 million tonnes of integrated aluminium. It also aspires to become the world’s largest zinc producer and one among the top three silver producers globally.
"The mega-targets set in the Budget for investment in the infrastructure sector for ₹100 lakh crores over the next five years will lead urbanisation and industrialization in the country, generating significant demand for natural resources," said Agarwal.
During the last fiscal, Vedanta's capital expenditure was around ₹10,000 crore. The company registered a revenue of ₹93,373 crore with an earnings before interest, tax, depreciation and amortisation margin of 31% at ₹24,961 crore. Currently, free cash flow with the company is at Rs11, 553 crores, an increase of 47% year-on-year.
"As against global economic growth at a steady 3%, our country’s GDP is estimated to grow by 7.3% in 2019 and 7.5% in 2020, making us one of the few large emerging economies. The world is looking at India to play the role of the lead growth engine, a role China played for almost three decades. The demand potential for our resources such as oil & gas, zinc-lead, silver, aluminium, iron ore & steel and copper is immense. Your company will be instrumental in addressing the growing demand in India and the region," said Agarwal.
India currently has a resources’ import bill of $465 billion. Agarwal said India's geology is similar to that of Brazil, Australia and South Africa, where the natural resource sector contributes 8-10% of the gross domestic product (GDP). However, in India, the sector contributes only around 4% of the GDP.
India currently imports around 80% of its oil & gas requirements amounting to $150bn. As India’s largest private sector oil and gas producer, Agarwal said, Vedanta aims to double its current contribution of 27% of nation’s production. Vedanta is now, also, the largest private acreage holder in the country with the acquisition of 53 new blocks under the new licensing policy.
"At the oil & gas business, use of artificial intelligence and predictive data analytics in our operations is driving enhanced production and safety. The business has deployed the largest polymer enhanced oil recovery program in the world," added Agarwal.
At 11.45 am, Vedanta Ltd's scrip was trading at ₹161.70, up 1.06% on the BSE.
