Vedanta Resouces Case Study

                       Vedanta Resources

Contents

Classification of the company e.g. size, sector, type of business        

Analysis of the political, legal and regulatory, socio-cultural and demographic, and technological environments in which your assigned company operates.        

Key factors in the internal and external environment that might affect your company and/or influence decisions made by managers in the company.        

Growth strategy        

Classification of the company e.g. size, sector, type of business

Vedanta Resouces is a company based in United Kingdom (UK) that deals primarily with metal mining. It is the largest company in the industry of Metals and Mining in UK. Although headquartered in London, it has expanded its operations to in India, Zambia and Australia as well. The metals it focuses on include Oil and Gas exploration, Lead, Iron ore, Pig Iron, Metalurgical Coke, Zinc, Copper and Aluminium and Gold (Vedanta Resources).

With approximately 32000 employees, it garners the retained profit US$1665.8 million, with a revenue of US$ 2512 million, according to its annual report published in 2013 (Annual Reports and Accounts 2013). This shows that Vedanta can be classified amongst large companies not just on the basis of its number of employees, but also through its operations branched into four continents, allowing it to amass significant revenues and operating incomes.

Analysis of the political, legal and regulatory, socio-cultural and demographic, and technological environments in which your assigned company operates.

Vedanta Resources operates in a volatile environment with regards to consumer demand and global growth, with continually emerging new businesses. It is positioned well in terms of its safe demand market, as India imports 80% of its crude oil, as it the largest private crude oil provider in India. With low labor cost, and a stable consumer market and economies of scale due to a large scale of production, it enjoys significant returns ("Vedanta's Bauxite Mine and Alumina Refining Operations, Orissa, India"). It has been numerous times on grounds of inability to follow human rights and environmental legislations. It has also been attacked by human right organisations such as Amnesty International and civil society activists on grounds of water and air pollution for its mining operations in Niyamgiri Hills in Orissa, India. Vedanta rejected the claims by asserting the dust pollution due to increased use of fertilizer in the region ("Vedanta's Bauxite Mine and Alumina Refining Operations, Orissa, India").

Similarly, in February 2010, the Church of England pulled back its shares on the ground that Vedanta does not respect human rights and local communities.

Amnesty International reported

“It is clear that Vedanta Resources and its subsidiaries have failed to respect the human rights of the people of Lanjigarh and the Niyamgiri Hills. The proposed bauxite mine threatens the survival of a protected Indigenous community.However, these risks have been largely ignored and consultation with and disclosure of information to affected communities have been almost non-existent” (Amnesty Slams Vedanta Resources).

Organisations like ActionAid are aiding local population of India to fight Vedanta Resouces, as they feel that Vedanta’s mining operations are a threat to the culture and religion of the indigenous people, and a blatant persecution of the rights of minorities that live there. Their apprehensions arise due to a large scale deforesation, destruction of eco-system and disruption of water resources that are a source of irrigation and livelihood of the adjoining area ("Vedanta's Bauxite Mine and Alumina Refining Operations, Orissa, India").

Although Vedanta Resources has followed all legal procedures before commencement of its operations, as it has signed a memorandum of understanding with Orissa Government in order to establish a bauxite mine at the top of Niyamgiri and a refinery for processing at the hill of mountain. It aims to mine approximately one million tonne of bauxite from the region ("Vedanta's Bauxite Mine and Alumina Refining Operations, Orissa, India"). After three years of legal battles, Vedanta has been a clearance by the Supreme Court to continue its operations, while the Civil Society groups and Human Right Activists remain antagonistic to its advances.