This has been an exciting year for Vedanta and we have delivered a strong financial and operational performance. We continued to focus on cost optimization and productivity enhancement while also benefiting from the recovery in global commodity markets during 2016-17 in several of our commodities. Together, these factors translated into strong EBITDA of Rs, 21,437 Crore and free cash flow of Rs, 13,312 Crore for the year.
The completion of the Cairn merger is a major milestone, transforming Vedanta into a diversified natural resources powerhouse. It simplifies our corporate structure and will unlock value by leveraging Group synergies. I very warmly welcome the Cairn shareholders, who are now Vedanta shareholders following the merger. The combined entity gives us a diversified, low-cost portfolio with industry-leading volume growth from our well-invested assets.
We have, over the past two years, delivered total cost and marketing savings of about Rs, 4,500 Crore.
We reduced our gross debt by over Rs, 4,000 Crore during 2016-17 and by a further Rs, 6,200 Crore since April 1, 2017. Our disciplined capital allocation strategy is underpinned by our existing portfolio of world-class assets and operational excellence to deliver strong and stable cash flows. Record dividends of over Rs, 21,000 Crore declared by the group (comprising about Rs, 7,000 Crore from Vedanta Limited and Rs, 14,000 Crore by our subsidiary, Hindustan Zinc Limited) during the year and the announcement of our dividend policy underscore our confidence. This is also reflected in our strong credit rating and sector-leading leverage ratios.
We are moving forward with one of the strongest balance sheets in the sector in India as well as globally, and a commitment to continue creating value for our stakeholders.
DOING THE RIGHT THINGS
Vedanta is among the top contributors to the country''''s exchequer, contributing nearly Rs, 40,000 Crore in FY 2017.
Vedanta Limited has been ranked as India''''s leading publicly listed company in the India Disclosure Index 2016 report by FTI Consulting. We were the only company in the natural resources sector to achieve the full score across all disclosure parameters.
We take our responsibility to communities seriously. Through specific initiatives in critical areas such as child malnutrition, education healthcare and skill development, we are helping communities and individuals lead a better and more sustainable life. Today, our initiatives positively impact nearly 2.2 million people. Through our Nand Ghar initiative, we are empowering communities and supporting their developmental aspirations. These Nand Ghars provide safe drinking water, mobile health vans, nutritious meals, toilets and awareness on practices that promote a healthy environment for mothers and their children.
Vedanta also supports India''''s ratification of the Paris Agreement on climate change. We are conscious of the need to improve the carbon footprint, as well as to expand renewable and other low-carbon sources of energy.
Across our operations, safety, environment and health come first. We are doing everything we can to ensure that our operations are safe and free of any risks or hazards, employing global best-in-class standards. We are investing in knowledge building and strengthening our team capabilities, so that they are better prepared for the evolving business challenges.
Without doubt, our people play a key role in Vedanta''''s march towards continued excellence. In line with this philosophy, through our ''''Internal Growth Workshops'''' we promote talent from within the Group''''s business and functional pillars into leadership roles. These workshops have to date, identified over 350 new leaders which includes 25% female professionals across businesses, and provided them the opportunity to take up significantly elevated roles.
Additionally, through the ''''V-connect'''' initiative, our 12,000 professionals are anchored by top leaders to communicate the organization’s vision and growth. This has helped improve employee engagement levels, leading to increased contribution, higher motivation and ultimately, superior performance.
A signatory of the United Nations'''' Women''''s Empowerment Principles (WEP) - ''''Equality Means Business'''', Vedanta practices and promotes equal employment opportunities.
BELIEVING IN INDIA
At Vedanta we believe strongly in India''''s growth story, and are proud to be part of the movement to increase manufacturing to 25% of the country''''s GDP
We are conscious of the role that natural resources play in developing India''''s infrastructure, and the important part that Vedanta is playing in this development.
There is visible growth across all sectors of the economy, which bodes very well for the resources sector and especially for Vedanta''''s commodity portfolio. We are encouraged by reforms including to the Goods and Services Tax (GST), initiatives to develop infrastructure and focus on providing affordable housing. These are all transformative steps, designed to strengthen the country from within and unleash its full economic potential.
One of the most important ingredients of this growth will be Oil & Gas. I believe India''''s Oil & Gas appetite is enormous, but greater efforts are needed to encourage exploration in India by global and domestic explorers alike. While the government has made a start, exploration is still not sufficiently incentivized. I look forward to continuing our engagement with the Government of India, to encourage exploration to meet India''''s growing Oil & Gas needs.
THE PROMISE OF PERFORMANCE
In 2016-17 we performed well both on volumes and costs. The Indian Zinc operations, Aluminum, Power and Copper all reported record production. Technical efficiencies, effective re-contracting of mining and maintenance areas, logistics improvements, and better fixed cost absorption all contributed to margin expansion. This, in turn, translated into the highest net income in the last four years for Vedanta. We will continue on this path as we seek to generate higher cash flows and growth from our existing assets.
I am excited about our Gamsberg project in South Africa which is coming into production in the next calendar year, particularly with the zinc concentrate market in deficit.
Vedanta is the largest private producer of oil and gas in India operating about 26% of India''''s domestic crude oil production and we remain committed to growing this business under the Cairn brand.
Digitization is a global trend towards which India is now making rapid strides. We see significant opportunity to use digital technology to harness further efficiencies and manage costs. We have renewed our programme on vendor optimization and quality score-carding. This will help us improve our partnerships, which will in turn produce efficiency and cost benefits. We are also focusing on various outsourcing models, using service providers with cutting-edge technology to help improve volumes, recoveries and exploration.
-Eureka- is an open innovation platform to enable people to submit and rate ideas and suggestions openly, towards developing a social innovation community that creates and incubates innovative thinking in a most sustainable manner. Through this platform, our employees are encouraged to share new ideas to streamline operations and reduce wastage.
We are pleased with our performance in FY 2017 having closed the year with a Q4 EBITDA of Rs, 7,275 Crore. But we are looking forward to a stronger and even more exciting year ahead having further reduced our gross debt significantly in the first 45 days of FY 2018. With the benefits of volume -Our disciplined capital allocation strategy is underpinned by our existing portfolio of world-class assets and operational excellence to deliver strong and stable cash flows.-
growth from invested capital yet to reach their full potential, coupled with favorable demand-supply dynamics, we believe the Company has the potential to deliver even better.
During the year, we welcomed Larsen & Toubro''''s former MD, K. Venkataramanan on our Board. I am confident that Vedanta will benefit from his four decades of experience in large-scale project management and hydrocarbons.
More recently, we have also welcomed on our Board, Aman Mehta, the former Chairman and CEO of HSBC USA and CEO of HSBC Asia Pacific and Priya Agarwal, who has worked with Ogilvy & Mather and Korn Ferry International. Together, they bring further diversity and perspective to Vedanta''''s board.
I am thankful to the board members and all members of our leadership team for their continued sound guidance and contribution in making Vedanta stronger and more efficient with each year that passes. I would like to congratulate our committed and hardworking people whose innovation and initiatives have contributed to the Company''''s growth and sustainability.
I would also like to thank Tom Albanese for his brilliant stewardship of Vedanta for the past three-plus years as his contract comes to an end and he has decided that this is the right time to rejoin his family in the US. He will be with us until August 2017. We are in the process of identifying, and will soon announce, a suitable successor.
I am confident about the future we are building here at Vedanta at this very exciting time, not only for the Company and its stakeholders, but also for India''''s growing economy.