Vedanta Resources

Industry Profile. :  Mining as primary sector of economics is very important for development. Not for employment but utilization of natural resources. Minerals constitute the back-bone of economic growth of  any nation and India has been eminently endowed with this gift of na­ture. There are many evidence that exploitation of minerals like coal, iron-ore, copper,  lead-zinc has been going on in the country from time immemorial. The Mining industry in India is a major economic activity which contributes significantly to the economy of India. The GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector it contributes around 10% to 11%. Even mining done on small scale contributes 6% to the entire cost of mineral production. Indian mining industry provides job opportunities to around 700,000 individuals

However, the first recorded history of mining in India  dates back to 1774  when  an English  Company was granted permission by the East India Company for mining coal in Raniganj.  M/s  John Taylor & Sons Ltd. started gold mining in Kolar Gold Fields in the year 1880.  The first oil well was drilled in Digboi in the year 1866 – just seven years after the first ever oil well was  drilled anywhere in the world viz.  in Pennsylvania state, USA in 1859. Mining activities in the country however remained  primitive  in  nature and  modest in scale uptill the beginning of the current century. Thereafter,  with progressive industrialisation the  demand  for and  hence  the production of various minerals gradually went up. After India became independent,  the growth of mining  under  the impact  of  successive Five Year Plans has been very fast.  There are ambitious plans in coal, metalliferous  and oil sectors to  in­crease  production of minerals during the 8th Five Year Plan and thereafter.

Company Profile : Vedanta Limited, part of Vedanta natural resources group is one of the worlds largest globally divrsified natural resources company operating across commodity, Zinc, Lead, Silver, Crude Oil, Iron ore, copper, aluminum, Metallurgical coal. the company founded in 1954 as Scambi Economici SA GOA as mining company. The companies operations are across Goa, Odisa, Rajasthan, chattisgarth, Madhya pradesh, Karnataka, Punjab. the company is also in business of power generation with 9000 MW mostly thermal cock based power plants. the company also hold stake in BALCO, Hindustan ZINK, with its subsidiary Cairn India the company is operative in oil production also.

Share Holding :  It is a company owned by foreign promoter. Indian promoter also hold stake but that is negligible. Total promoter holding is 67.28%. Mutual Fund hold 2.47% Bank and financial institutions holding 4.37.  Insurance Companies are least interesting in it with holding 0.77%. Foreign Investors holding 17.60% Remaining is with Public.

Financials and Ratios :  

 2010-112011-122012-132013-142014-152015-162016-17
Revenue8,008.286,899.782,529.9130,353.5934,511.2738,634.4446,368.18
Net Profit3,432.801,679.94120.771,076.091,927.205,471.8811,068.70
Net profit margin45.8125..795.513.775.9218.3530.19
EPS39.3019.331.393.676.5018.4529.04
Book Value133.34148.58149.85113.59114.87129.89268.78
Dividend payout9.5220.697.1989.5463.0718.9666.17
Dividend per share3.540.103.254.103.5019.45
ROE29.62130.923.195.6514.2013.88
ROCE27.0211.900.841.973.437.9910.19
ROA24.179.410.661.282.455.706.66
Debt to equity0.080.280.351.001.021.030.46
Asset turnover52.7736.51 11.9634.1741.3831.0522.06

Future Prospects : For development of economy, Commodities are important. Vedanta is a company which is in business of nearly all major commodities. Crude, Nickel, Zink even partly silver and Power through its subsidiaries in crude oil also. So for well diversified portfolio, Vedanta is good company. Dividend policy which states that full dividend received from Hindustan Zinc will be pass on to Shareholders of Vedanta. Debt levels are also good. Big difference in fundamental is because merger of Cairn India with the company. Even the fundamentals are loking strong, management is not good and history prove that the management tried to compensate specific people in promoter group and family unethically.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter