"Value Crafters: Unveiling Vedanta's Wealth Symphony"

Value-based management (VBM) is a strategic approach that focuses on maximizing shareholder value while considering the interests of other stakeholders like employees, customers, and the community. It involves identifying and prioritizing key value drivers, directing resources effectively, and promoting transparency and accountability. VBM fosters a culture of value creation across all aspects of an organization, ensuring that short-term gains are not the only focus. This holistic approach to value creation ensures that organizations are focused on short-term gains, sustainable growth, and stakeholder satisfaction, ultimately leading to long-term success and sustainability.

Why Vedanta Limited?

Vedanta Limited, a diversified natural resources company with a rich heritage spanning over a century, has emerged as a beacon of innovation, sustainability, and stakeholder excellence in the global mining industry. Its unwavering commitment to operational excellence, environmental stewardship, and community upliftment has propelled the company to the forefront of the industry, shaping the world around us. This assertion is firmly rooted in Vedanta's impressive financial performance, unwavering commitment to sustainability, and astute leadership.

In the bustling heart of the corporate landscape, Vedanta Limited emerges as a beacon of shareholder value creation. Picture this: a company that doesn't just thrive but orchestrates a symphony of financial success, leaving a lasting imprint on its investors.

Motilal Oswal Wealth creators report

Amid the financial complexities, Vedanta stands tall, boasting a remarkable Return on Equity (ROE) at an impressive 40.34%. This isn't just a number; it's a testament to the company's prowess in utilizing assets efficiently, turning them into a profitable melody for shareholders. In the fiscal year 2022-23, Vedanta's Return on Net Assets (RONA) reached a crescendo at 0.57, indicating the company's commitment to maximizing returns.

But the story doesn't end there. Vedanta, like a wise conductor, ensures its shareholders are not mere spectators but active participants in the performance. Imagine receiving a dividend of ₹15 per share – a tangible reward for your trust and investment. This isn't just a financial transaction; it's a melody of fruitful returns, a harmonious partnership between company and shareholder.

Delving deeper into the narrative, Vedanta engages in strategic share repurchases, a deliberate move to elevate share prices and amplify shareholder value. It's akin to fine-tuning, ensuring every note resonates with the potential for growth and prosperity.

Yet, Vedanta's commitment extends beyond balance sheets and financial acumen. This company is a responsible corporate citizen a steward of environmental and social responsibility. In the communities it touches, Vedanta doesn't just operate; it leaves a positive impact. It's a story of sustainable practices, where corporate success harmonizes with societal well-being.

And amidst it all, Vedanta plays a pivotal role as a significant employer, contributing not just to its own growth but also fostering economic prosperity in the vast landscapes of India. It's a narrative of job creation, where opportunities flourish, and individuals become the authors of their success stories.

Vedanta Limited stands out as a storyteller in the grand tapestry of corporations, weaving a tale of financial acumen, responsible citizenship, and a commitment to shareholder prosperity. It's a story where every shareholder becomes a character, and every investment is a chapter in the epic value creation journey.

1. Strong commitment to sustainability - The passage emphasizes Vedanta's initiatives to minimize environmental impact and dedication to sustainable practices. This could be a key selling point.
2. Positive impact on economic development - The text highlights Vedanta's role in creating jobs, investing in infrastructure, and contributing to economic growth in its areas of operation. This demonstrates a broader purpose.
3. Social responsibility efforts - Multiple initiatives to improve lives and positively impact communities reflects Vedanta's socially conscious approach. This builds goodwill and trust.
4. Emphasis on governance and ethical behavior - Prioritization of transparency, accountability and integrity paints Vedanta as an honest, well-governed organization. This provides reassurance to stakeholders.
5. Medium score on innovation matrix - While highlighting innovation efforts through R&D and process improvements, the passage indicates there is room for improvement on the innovation front. More could be done to showcase forward-thinking.

The key positives centered around sustainability, social impact, and governance, while innovation is called out as an area requiring more impetus. Leveraging the strengths and improving on innovation would make for a compelling, well-rounded narrative.

Traditional vs VBM Metrics.

Feature	Traditional Approach	VBM Approach
Focus	Short-term financial performance	Long-term value creation
Metrics	Profitability, EPS, ROE	Customer satisfaction, employee satisfaction, community engagement, environmental impact
Decision-making	Based on financial data	Based on stakeholder feedback and data
Goal	Maximize shareholder value	Create sustainable value for all stakeholders and the environment
Communication	Limited disclosure, focus on financial results	Transparent communication, focus on non-financial results
Governance	Board-centric, shareholder-driven	Stakeholder-centric, value-driven
Culture	Short-term oriented, risk-averse	Long-term oriented, risk-aware
Leadership	Command-and-control	Servant leadership

Vedanta Limited is moving from a traditional shareholder primacy approach focused on short-term financials towards an inclusive and transparent VBM model that balances financials with broader stakeholder needs and sustainability.

How can VBM metrics justify Vedanta's Value Creation?

Based on EVA

Vedanta Limited's fiscal 2022 was a strong year for value creation and capital efficiency, with a robust Economic Value Added (EVA) of INR 136 million, surpassing its cost of capital. Due to buoyant commodity prices, the company also achieved a superlative return on invested funds, exceeding 20%. However, business conditions deteriorated in Fiscal 2023 due to inflationary pressures and global slowdown fears, resulting in a drop in EVA to INR 36 million and a 12.25% reduction in ROCE. Despite these challenges, Vedanta's low-cost advantages offer operational resilience, positioning it well for the next super cycle.

Based on MVA

Due to robust commodity tailwinds, Vedanta Limited achieved remarkable market value growth in FY2022, as evidenced by our MVA of INR 707 billion demonstrates strong investor confidence.

On the other hand, due to China lockdowns and recessionary fears, we have had to deal with considerable volatility in commodities prices and demand in FY2023. Pressure on metals sector shares also resulted in our share price correcting to INR 274. Our market capitalization, as a result, decreased to INR 1,020 billion.

Based on FGV

Vedanta Limited's FGV decreased from ₹6,59,913 crore in FY 2022 to ₹4,12,184 crore in FY 2023, primarily due to a decrease in EVA, which was influenced by factors like declining metals and mineral prices, rising production costs, increased competition, and poor management decisions. Despite this, Vedanta remains a profitable and growing company.

Based on WAI

Vedanta Limited's FGV declined in FY 2023 due to a 73% contraction in EVA, reaching INR 36 billion. Despite challenges like the global economic slowdown and commodity price drop, the company remains substantial in zinc, aluminum, oil & gas, expanding into new minerals like lithium and copper. 

Conclusion

Vedanta Limited is a well-positioned business with a solid track record of growth and profitability overall. Though the company is well-positioned to benefit from long-term growth possibilities in the global mining and metals market, it faces significant short-term hurdles.