Due Diligence Report on Vedanta Limited

Vedanta Limited is a diversified natural resources company engaged in mining, metals, oil, and gas
exploration headquartered in Mumbai, India. This report is based on information available in the last
five years and focuses on adverse matters that are reported in the public domain during this period.

Sources and Databases Used

- Company filings with the Securities and Exchange Board of India (SEBI)
- News articles from reputable sources such as Reuters, Economic Times, etc.
- Regulatory filings on the National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE)
- Environmental impact reports from government agencies
- Court documents from relevant legal cases

Adverse Matters

Environmental Concerns and Regulatory Violations

Vedanta was fined £1 million by the UK's Serious Fraud Office (SFO) for failing to prevent bribery in
Zambia. The SFO found that Vedanta had failed to put in place adequate anti-bribery controls, which
allowed its employees to pay bribes to government officials in Zambia to secure mining contracts. 1
Vedanta was accused of environmental violations at its copper smelter in Thoothukudi, India. The
smelter was shut down by the Tamil Nadu Pollution Control Board (TNPCB) in May 2018 after it was
found to be emitting toxic gases into the atmosphere which resulted in Thoothukudi police firing.
Vedanta has denied the allegations of environmental violations.2

Community Disputes and Protests

Protests by local communities against a proposed mining expansion due to concerns about
displacement and environmental impact. Vedanta was accused of human rights violations at its
copper mine in Lanjigarh, India. The mine has been accused of displacing tribal communities and
polluting the environment. Vedanta has denied the allegations of human rights violations.3 Land
acquisition disputes and protests at a project site, leading to operational delays i.e. from 2015 to Feb
2021.4

Legal Disputes

Vedanta was accused of tax evasion in India. The Central Bureau of Investigation (CBI) raided
Vedanta's offices in connection with the investigation. Vedanta has denied the allegations of tax
evasion. Vedanta faced legal action related to alleged tax evasion, resulting in a prolonged legal battle
and reputational damage. Vedanta Limited has withdrawn cases in the Delhi High Court as well as
before a global discretion council to settle a Rs 20,495 crore review charge question with the public
authority. Post slapping of a Rs 10,247 crore charge interest on UK's Cairn Energy Plc for supposed
capital additions made on a 2016 interior redesign of its India business, the Personal Duty Division had
looked for Rs 20,495 crore in charges from Cairn India for neglecting to deduct charge on capital
increases made by its English parent. it has withdrawn all legitimate difficulties against the public
authority and given an endeavor to forego all future freedoms relating to the expense interest.5

1
https://www.theguardian.com/global-development/2019/jan/18/zambia-villagers-await-outcome-
uk-mining-firm-pollution-case-appeal-vedanta-resources
2
https://indiankanoon.org/doc/126942623/
3
https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/theres-no-mine-but-
is-it-all-fine-on-niyam-hills/articleshow/63763978.cms?from=mdr
4
https://www.landconflictwatch.org/conflicts/tribals-in-niyamgiri-protest-against-bauxite-mining-by-
vedanta-limited
5
https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/vedanta-withdraws-
cases-against-govt-to-settle-retro-tax-dispute/articleshow/88260048.cms
Shareholders filed a lawsuit over governance concerns, questioning transparency and board decisions.
Vedanta was accused of financial irregularities. The Securities and Exchange Board of India (SEBI)
ordered an investigation into Vedanta's financial statements. Vedanta has denied the allegations of
financial irregularities.6

Financial Challenges

The decline in global commodity prices impacted Vedanta's revenues, leading to financial
restructuring and debt repayment challenges. Financial losses due to market volatility and economic
downturn, necessitate cost-cutting measures and asset sales. The reason quoted by the organization
behind the fall in profit and margins to an increase in raw materials such as thermal coal, carbon
alumina, and coking coal.7

Safety Incidents

Reported safety breaches at certain mining sites resulted in injuries to workers, attracting regulatory
scrutiny. Vedanta Limited has been deprived of international safety awards amid worries that it won
without pronouncing that a fireplace breakdown at one of its locales had killed no less than 40
workers in September - quite possibly of the most exceedingly terrible modern misfortune in India's
history.8

Implications and Mitigation*

These adverse matters can have significant implications for Vedanta Limited, including reputational
damage, legal liabilities, financial losses, and operational disruptions. To mitigate these risks, Vedanta
could consider:

- Strengthening environmental compliance and sustainability practices.

- Enhancing community engagement and addressing concerns proactively.
- Implementing rigorous safety measures to prevent incidents.
- Improving corporate governance and transparency to address shareholder concerns.
- Developing robust risk management strategies to navigate commodity price volatility.

Conclusion

The adverse matters mentioned in this report provide insights into the challenges and risks Vedanta
Limited has faced in the past five years. Potential investors, stakeholders, and interested parties must
consider these matters when assessing the company's overall health and prospects.

6
https://www.reuters.com/article/india-disclosure-idINL3N13M3XE20151207
7
https://www.livemint.com/market/stock-market-news/vedanta-groups-net-falls-67-as-input-costs-
soar-11686236510061.html
8
https://www.theguardian.com/business/2010/aug/29/vedanta-safety-awards-stripped