Mining conglomerate Vedanta Resources is looking at various growth opportunities in India to navigate through the downturn in the commodities market as well as lower demand leading to decline in metal prices.
The Anil Agarwal-led group believes that India offers “abundant growth and natural resource development opportunities”.
“I firmly believe that Vedanta is well-positioned, as a leading natural resources developer to take advantage of future growth. Over the next few years, 2.5 billion people worldwide are expected to be middle-class consumers and professionals, a third of these being Indians,” Agarwal told company shareholders yesterday.
He further said: “India’s 1.2 billion-strong population will drive unmatched domestic demand as the country’s international profile steadily rises.”
The country offers abundant growth and natural resource development opportunities, he said, adding that it needs many more natural resource companies like Vedanta, supplying iron ore, copper, aluminium, zinc and oil and gas for this rapidly developing country and its growing population.
Last week, the London-based Vedanta Resources reported 38 per cent decline in operating profit to USD 644.6 million (about Rs 4,135 crore) for the quarter ended June 2015 against an EBITDA (earnings before interest, taxes, depreciation, and amortisation) of USD 1.04 billion in the year-ago period.
The company said its revenue fell 4 per cent to USD 2.95 billion in April-June quarter of the current fiscal, from USD 3.06 billion in the same quarter of 2014-15.
Vedanta Resources CEO Tom Albanese attributed the performance in Q1 to “continued volatility in commodity prices”.
Agarwal further told shareholders that his aim is to find ways that will benefit all stakeholders. This year, the name change of Sesa Sterlite to Vedanta Ltd positions the group as a united and aligned identity, strengthening the linkage between its global businesses and communities.
On the proposed merger of Cairn India with Vedanta Ltd, he said: “We are constantly seeking to simplify the corporate structure of Vedanta. And this will be further strengthened through the merger between Vedanta Ltd and Cairn India Ltd that we announced this year.”
This merger will further consolidate Vedanta’s position as India’s natural resources champion with a diversified portfolio of assets which will deliver strong cash flows and reduce earnings volatility, he added.
“We are confident that it will create significant value for both sets of shareholders, as well as for Vedanta Resources. And I am delighted that the boards of Vedanta Limited and Cairn India have unanimously recommended the merger,” Agarwal noted.