Optimizing Project Procurement Strategies for Success

1. Project Procurement - Pace Price & Performance The 5Ps

3. CORE VALUES Excellence Trust Care Entrepreneurship Innovation Integrity Respect

4. Financial Highlights 2017

5. Group Structure Vedanta Resources Plc Divisions of Vedanta Limited • Sesa Iron Ore • Sterlite Copper (Tuticorin) • Power (2,400 MW Jharsuguda) • Aluminium (Odisha aluminium and power assets) • Cairn India (O&G) 50.1% 79.4% 79.4% Vedanta Ltd Konkola Copper Mines (KCM) Subsidiaries of Vedanta Ltd 100% 64.9% 100% 51% 100% 100% 100% Zinc India (HZL) Bharat Aluminium (BALCO) Western Cluster (Liberia) Skorpion & Lisheen -100% BMM -74% Talwandi Sabo Power (1,980 MW) MALCO Power (100 MW) AustralianCopper Mines Zinc International Notes: Shareholding based on basic shares outstanding as on 31 March 2017 Listed entities Unlisted entities

7. Jharsuguda Project Journey

8. Jharsuguda Complex – Bird’s Eye View 4X600 MW TPP-2 Plant-1 : 0.55 MTPA Plant-2 : 1.25 MTPA 9X135 MW TPP-1 8

9. Aluminium Expansion Story 10 times in 10 years 2013 2003 HOW or WOW !!!

10. Project Execution deliverables Safety Project Procurement Quality Cost Timeline

11. Infrastructure spending around the world is projected to grow… Projected Infrastructure Spending US$ 30-40 Trillion (2030) US/Canada $ 6.5 T Oil & Gas Power Transportation Asia/ Oceania $ 15.8 T Oil & Gas Power Transportation Mining Europe $ 7.3 T Oil & Gas Transportation South & Latin America $ 7.4 T Oil & Gas Mining Africa $ 1.1 T Oil & Gas Mining Middle East $ 0.9 T Oil & Gas Transportation … making project execution critical to business success Recent spending initiatives and deferrals have resulted in a number of estimates, ranging from US$ 30-40 Trillion Source: Accenture Research, Industry Reports

12. … and yet, most projects incur schedule and budget overruns… Capital projects continue to not meet owner and shareholder expectations, thereby…. Global performance levels: Budget and Schedule overrun against FID Schedule Budget 118 …effective procurement and selection of best suppliers and contractors is critical to project success! 143 years absolute Total Schedule overrun 402 Billion absolute Total Budget overrun 1242 76% of all projects Exceed Budget 55% of all projects Exceed Schedule 55% 76% 37% Average global Schedule Overrun 52% Average global Budget overrun 37% 52% Source:‘The Future of the Oil & Gas Industry Project’, World Economic Forum in Partnership with Accenture, 2014-2015 Note: Schedule and budget overruns= projection at FID vs. September 2014 actuals or estimates

13. Critical Project procurement activities along project lifecycle Project idea Basic design Detailed design Execution Commission Contracting strategy Procurement plan Package list Strategic sourcing Budgetary quotes Contract documents POs for technology Estimates for packages Vendor identification for all packages RFX process, appoint contractors, suppliers Manage Requisition to Pay Expediting Vendor reviews Contract closure Project idea Planning Purchasing/ Contracting Monitoring Contract Closure

14. Contracts Procurement performance review Inspections and audits Claims administration Records management system Lump sum turnkey (LSTK) Cost-Reimbursable Time and Material Free issue Procurement audits Negotiated Settlements Record management systems Handover….. Monitoring Ordering Closure

15. Typical project building blocks which need to be sourced… 4-5% 33% 6-8% 55% Land Erection and other services Engineering & project management services Equipment supplies

16. Project procurement vs. Operations procurement

17. Critical success factors for project procurement 1 Selection of contracting strategy based on organizational strengths and project execution experience 2 Identification of best vendor / supplier set for project needs 3 Robust contracting to avoid scope creeps, cost escalations, execution delays and to provide contractual remedies to execution issues 4 Early involvement of procurement in design and estimation and development of package list 5 Deployment of personnel at critical suppliers to ensure quality and timeliness of supplies 6 Development of detailed project procurement plan aligned to project plan and aligning engineering and commercial organizations to project plan 7 On time ordering of critical supply items through monitoring and closure of RFx process

18. Project Scorecard - Ensuring everything at its place! Contract finalisation & Execution Review and audit mechanism at Vedanta to ensure all Project deliverables are as per policy and with-in targets: Payments MIS / Budgeting / Accounting / Reconciliation Compliances Treasury (Forex, Investment, Banking) Project Insurance Stores / Weighment / Security / Scrap Project Objectives & Review Mechanism

19. Project Benchmark • TMS paper on Balco GAP commissioning published in 2007 TMS for completion of project in world benchmark timeline of 19 months. • Ground breaking to start-up of Jharsuguda Smelter-1 within 2.5 years. • Smelter Project cost @1800 $/MT for BALCO and 2300 $/MT for Jharsuguda against 4580, 7500 and 3500 of Emirates Aluminium, Ma’adein and Bahrain respectively. • Installation of State-of-Art technology available across globe: • M/s Outotec – Germany for Green Anode Plant • M/s Alstom – Norway for Fume Treatment Plant • M/s Befesa – Spain for Ingot casting facilities • M/s Properzi – Italy for Wire rod mills • M/s Wagstaff – USA for Billet Casting facilities • Power projects installed at 0.85 Mn$/MW and commissioned within 2.5 years of Ground breaking.

20. Vedanta Procurement Success Strategy It is not the lowest cost, it’s all about the RIGHT COST !!! Delivered by the 2 Ps – People with Passion.

21. Thank You