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Q.1 Choose the industry involving the selected problem and do an industry analysis as in
Appendix 1.1. [20 Marks].
-Nakul Midha [H18149]

Data on Companies engaging in Diversified Metals and Mining operations for 2019

Rank,
2019
(as Annua Annual
per l Sales Sales %
Forbe ($B) ($B) Chang Profi No of Asset Stoc
Company s 2000 (FY20 (FY201 e from ts Emplo s ks M. V.
Data, 2019 list) 19) 8) 2018 ($B) yees ($B) ($B) ($B)
Glencore 15800
1 International 107 219.8 205.4 7.01% 3.3 0 128.7 44.54 60.5
18.01
2 BHP Group 109 42.6 36.1 % 6 60644 102.4 57.82 138.3
3 Rio Tinto 111 40.5 40 1.25% 13.8 46807 90.9 43.68 100
Anglo
4 American 261 30.1 28.6 5.24% 3.6 69000 52.2 23.59 35.9
Freeport- -
5 McMoRan 401 17.55 18.62 5.75% 2.3 26800 42.2 9.79 20.3
27.47
6 Norilsk Nickel 574 11.6 9.1 % 3 78852 15.3 3.22 35.9
7 Grupo Mexico 594 10.5 9.8 7.14% 1.3 30475 26.9 12.09 24.3
Teck
8 Resources 623 9.7 9.3 4.30% 2.4 10000 29 17.5 14.1
Zinjin Mining 14.49
9 Group 889 15.8 13.8 % 0.625 18072 16.4 5.87 11.7
1 Sumimoto 48.28
0 Metal Mining 1060 8.6 5.8 % 0.847 7074 16 1.04 8.9
1 Jiangxi
1 Copper 1227 32.4 30.17 7.39% 0.372 19711 15 7.23 7.2
1 Mitsubishi
2 materials 1457 15.6 14.85 5.05% 0.033 26959 17.8 6.33 3.6
1 13.21
3 Boliden 1478 6 5.3 % 0.827 5819 6.6 4.15 8.4
1 12.50
4 Korea Zinc 1989 6.3 5.6 % 0.479 1376 6.5 5.31 7.1
38.88 55958 242.1
Total 467.05 432.44 166% 3 9 565.9 6 476.2
33.360 30.888 2.777 39970. 40.42 17.29 34.01
Mean 7143 57143 12% 357 6429 143 714 429
53.070 49.698 3.445 40283. 37.69 17.59 38.51
Std Deviation 8764 52108 13% 483 6066 688 596 754
0.4827 15800
Maximum 219.8 205.4 5862 13.8 0 128.7 57.82 138.3
-
0.0574
Minimum 6 5.3 651 0.033 1376 6.5 1.04 3.6
0.0726 26879.
Median 15.7 14.325 7153 1.8 5 22.35 8.51 17.2
 Assessing corporate underperformance of companies by metrics 1-24
Corporate Underperformance Criteria Verified (Y = yes; N = No) Y-
Tot
als
Com (1
pany 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 -
by s# 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 24)
1 N N Y Y Y Y N N N N Y Y Y Y Y Y Y Y N N Y Y Y Y 16
2 Y N N N N N Y Y Y Y N N Y Y Y Y N N N N N N N N 9
3 N N N N N N Y Y Y Y N N N N N N N N Y Y N N N N 6
4 Y Y Y Y Y Y Y Y Y Y N N N Y Y Y N N Y N Y Y Y Y 18
5 Y N N N Y N Y Y Y Y N N Y Y N Y N N Y Y Y Y N N 13
6 Y Y Y Y Y Y Y N N N N N N N N N N N Y N N N N N 8
7 Y Y Y Y Y N Y Y Y Y N N Y Y Y Y N N N N N N N Y 14
8 N N N N N N Y Y Y Y N N N N Y N N N Y Y Y Y Y Y 11
9 N N Y Y Y N N N N N Y Y Y Y Y Y Y Y N N Y Y N Y 14
10 N N N N N N Y Y N N N Y Y Y N Y N Y Y N Y Y N N 10
11 N N Y Y Y Y N N N N Y Y Y Y Y Y Y Y N N Y Y Y Y 16
12 Y Y Y Y Y Y N N N N Y Y Y Y Y Y Y Y N N Y Y Y Y 18
13 N N N N N N N N Y Y N N N N N N N N Y N N N N N 3
14 N N N N N N N N Y Y Y Y N Y Y Y N N N N N N Y Y 9
Y-
total 1 1 16
s 6 4 7 7 8 5 8 7 8 8 5 6 8 0 9 0 4 5 7 3 8 8 6 8 5

Assessing Corporate Underperformance by Metrics 25 - 30

Y-
Financial Total
Underperformance s
Criteria Verified (Y=Yes, (25-
N=No) 30)
2 2 2 2 2 3
Company EPS (USD) P/E Ratio ROI (%) 5 6 7 8 9 0
Glencore
International 0.29 32.86 2.02 Y Y Y Y Y N 5
BHP Group 1.97 17.52 10.67 N N Y N Y N 2
Rio Tinto 6.9 14.19 8.37 N N N N Y N 1
Anglo American 2.97 10.23 10.87 N N Y N Y N 2
Freeport-McMoRan 0.17 9.25 6.89 Y Y Y Y Y N 5
Norilsk Nickel 1.95 12.5 22.33 N N Y Y Y N 3
Grupo Mexico 0.25 12.42 7.82 Y Y Y Y Y N 5
Teck Resources 3.84 5.65 8.13 N N Y N Y N 2
Zinjin Mining Group 0.031 16.7 6.63 Y Y Y Y Y N 5
Sumimoto Metal
Mining 2.21 168.77 0.23 Y Y Y N N N 3
Jiangxi Copper 0.12 56.29 2.5 Y Y Y Y N N 4
Mitsubishi materials 1.03 302.64 0.67 Y Y Y Y N N 4
Boliden 2.33 13.11 14.33 N N Y N Y N 2
Korea Zinc 30 13.56 11.31 N N N N Y N 1
1 1
Total (Y- totals) 54.061 685.69 112.77 7 7 2 7 1 0 44
48.977857
Mean 3.8615 14 8.055
7.4721774 81.246795 5.7015333
Std Deviation 87 91 15
Maximum 30 302.64 22.33
Minimum 0.031 5.65 0.23
Median 1.96 13.875 7.975

Performance Underperformance data for 2019

Y totals for criteria numbers Y totals along criteria
Company 1 - 6 7-12 13-16 17-24 25-30 1-12 13-30 1-30
Glencore International 4 2 0 6 5 6 11 17
BHP Group 1 4 0 0 2 5 2 7
Rio Tinto 0 4 0 2 1 4 3 7
Anglo American 6 4 0 5 2 10 7 17
Freeport-McMoRan 2 4 0 4 5 6 9 15
Norilsk Nickel 6 1 0 1 3 7 4 11
Grupo Mexico 5 4 0 1 5 9 6 15
Teck Resources 0 4 0 6 2 4 8 12
Zinjin Mining Group 3 2 0 5 5 5 10 15
Sumimoto Metal Mining 0 3 0 4 3 3 7 10
Jiangxi Copper 4 2 0 6 4 6 10 16
Mitsubishi materials 6 2 0 6 4 8 10 18
Boliden 0 2 0 1 2 2 3 5
Korea Zinc 0 4 0 2 1 4 3 7
Y - totals 37 42 0 49 44 79 93 172

Performance Rank of companies for 2019

Ranks based on Y totals of criterion Ordered Rank based on metrics
numbers 1-30
Company 1-12 13-30 1-30
Mitsubishi materials 3 2 1 1
Glencore
International 5 1 2 2.5
Anglo American 1 7 2 2.5
Jiangxi Copper 5 2 4 4
Freeport-McMoRan 5 5 5 6
Grupo Mexico 2 9 5 6
Zinjin Mining Group 8 2 5 6
Teck Resources 10 6 8 8
Norilsk Nickel 4 10 9 9
Sumimoto Metal
Mining 13 7 10 10
BHP Group 8 14 11 12
Rio Tinto 10 11 11 12
Korea Zinc 10 11 11 12
Boliden 14 11 14 14

Q.2: Based on Chapter 01, describe the stages of its earlier success, if any, and then the stages
of its current underperformance, downturn, decline, distress, cash crisis, insolvency and
bankruptcy [20 Marks].
-Abhijeet Narang [H18002]

Glorious past: Sterlite, a subsidiary of Vedanta Group operated the largest copper smelter plant in
Thoothukudi (also known by the name of Tuticorin), Tamil Nadu (India). During its golden years the
plant used to cater to 35% of copper consumption in the domestic market, apart from supplying to the
markets of Gulf and Asian countries. The peak capacity of the plant was reported to be around 4 lakh
tons of copper per year. The owner of the company is Anil Agrawal who earned himself a tag of
shrewd and aggressive business, having made humble beginnings from the position of a scrap dealer
in Bihar. According to an estimate the net worth of his moveable and un-moveable property was INR
21,485 crores in the year 2017.
The story of Sterlite’s Tuticorin plant actually began in Maharashtra where the Maharashtra Industrial
Development had allotted 500 acres land to Sterlite to set up a copper smelter with a capacity of
60,000 tons per annum in the coastal district of Ratnagiri. It took one year of struggle from the people
of Ratnagiri which were in a state of trauma as they feared the extent of the pollution that would be
caused by the proposed plant, that government finally decided to appoint a committee to see the
environmental impacts of the plant. The people had contested that the creation of a jetty to unload the
raw material being procured from Australia for the plant would cause erosion of the Mirya Bay and
with the arrival of big heavy ships driving away the fish to deeper waters and resulting in loss of
earning for the local fishermen. The appointed committee found the same and this was first setback
for the Sterlite. But the company took a breath of respite as within a year the company gained foot-
hold in Tamil Nadu. It was given No Objection Certificate by Tamil Nadu Pollution Control Board
with the stipulation that it does Environment Impact Assessment (EIA) and a condition that it should
be located atleast 25 kms away from Gulf of Munnar.
The Ministry of Environment and Forests issued clearance without waiting for EIA. TNPCB then
issued consent with the same condition as above. The setback condition was violated, and the plant
was built within 14 km of the Gulf of Munnar. On 14th October, 1996, TNPCB gave a clearance to the
plant to operate despite the violation.
In October 1994, Tamil Nadu Chief Minister Jayalalitha laid the foundation stone for the
company's copper smelter project in Tuticorin.
But this was just a wake-up call as what followed was a series of gas leaks from the plant.
August 20, 1997: staff placed at a sub-station located near the copper plant and being operated by
Tamil Nadu State Electricity Board complained of headache and choking after smoke rose from the
plant.
 (An RTI inquiry shown above, source: Down to Earth)

May 5, 1997: women working at a dry flower manufacturing unit near the plant fainted and fell sick
from similar reasons.
Beginning of turmoil: The most important scenario arrived on November 23, 1998, when the
factory was closed for the first time and only later to become a pattern.
What was stunning that the TNPCB gave a spotless chit to the organization.
• had neglected to build up a greenbelt;
• was delivering items it was not approved to;
• had sullied the groundwater with arsenic, lead, selenium, arsenic, aluminum and copper;
• may have messed with the online air screens;
• had caused gas releases that hurt individuals in Ramesh Flowers and the TNEB office;
• had found itself 14 km from advised islands in the Gulf of Mannar, in this way damaging the
condition spread out in Consent to Establish.
On December 1, after seven days, the Madras High Court altered its previous request and enabled the
plant to run and asked the Nagpur-based National Environmental Engineering Research Institute
(NEERI) to direct one more examination. This was the start of a bonanza for NEERI. Somewhere in
the range of 1999 and 2007, NEERI got Rs. 1.27 crores worth of agreements for different
examinations, all of which consistently protected Sterlite's tasks and underplayed its effect.
Subsequent to having arraigned Sterlite on each include in its November 1998 report, NEERI
presented its second report on February 9, 1999, under 45 days after the fact that gave the plant a
perfect chit, with suggestions that the processing plant must be kept running at full ability to lead a
Comprehensive Environmental Impact Assessment – an investigation that should have been led before
the industrial facility was set up. The examination, which should have taken not exactly a year to
finish, was submitted distinctly in July 2003 permitting Sterlite to keep running at well past its full
limit meanwhile. Where the TNPCB had constrained creation to 70,000 tons for every annum,
Sterlite made 1,75,242 tons of copper anode in 2004.
March 2018: Amid the protests, the existing plant is temporarily shut for scheduled maintenance.
Subsequently, the company seeks consent to reopen from the TNPCB. The request is rejected on the
grounds that the company hasn’t complied with the required environmental norms.
The anti-Sterlite movement, meanwhile, gains momentum with multiple political parties lending
support to the protestors.
May 2018: Over 100 days of peaceful demonstrations turn violent after police open fire. At least 11
people are killed and several more injured as police try to disperse protesters. The Madras high court,
on May 23, stays the expansion of the second unit at Thoothukudi, insisting that the company seek
public consultation before taking on such a move.
In a second round of police firing later that day, another person is killed and at least five injured. The
firing this time is reportedly to disperse crowds that are agitating against the first round of police
firing. Protests against Sterlite, and against the killing of civilians, spread to Chennai and New Delhi.
Present status: The organization's absolute EBITDA fell 4 percent to Rs 24,012 crore in FY19. Aside
from the Thoothukudi shutdown, there was input ware swelling, lower metal costs and greater
expense of generation, says their yearly report for FY19
"The Tuticorin smelter conclusion influenced creation in India," said the organization, including its
Silvassa (Goa) treatment facility and pole plant kept on working not surprisingly.
The plant has been closed since March 2018, after a request from the Tamil Nadu Pollution Control
Board. A request for the perpetual conclusion from the state government was issued after an open
challenge against the plant brought about police terminating and passing of 13 individuals.
The organization tested the conclusion request through an intrigue before the National Green Tribunal
(NGT). A three-part advisory group set up by the Tribunal had given a report, in view of which the
last put aside the contamination board request and approached it to pass a request for Consent To
Operate. The state at that point requested of the Supreme Court, which on February 18 this year had
put aside the NGT request. The peak court additionally guided the organization to approach the high
court, where the issue is as a rule as of now heard.
Independently, the express government's mechanical investment advancement office, SIPCOT, had
through a letter of end-May 2018, dropped the prior allocation of 342 sections of land for a stage 2
development arrangement of the organization. This is additionally being challenged in court.
Impact on the nation: The country’s import bill was $2 billion, the supply corresponding to which
was maintained by Sterlite. Post the closure of the plant the demand for the copper in the domestic
sector had to be met from imports. The 35% of the domestic needs which was met by Sterlite had
certainly lost its supply which made it overdependent on external nations. Also, increasing the trade
deficit it had with other nations.
 (Notice placed at the gate of Sterlite’s Thoothukudi plant,

The inflection point: In a prior incident the company had been slapped with a fine amounting to INR
100 crores in the year 2013. The apex court of India had asked the company to pay the sum for
causing environment pollution while operating its copper smelting plant in Tamil Nadu. The
seriousness of the case can be estimated as the bench had remarked that any sum less than 100 crore
would not have desired impact. This came after the 2010 case where the Tamil Nadu Pollution Control
Board had directed the plant for closure in the wake of an alleged noxious gas leak. The company had
moved to high court to appeal against the decision which retained the same decision as that of the
TNPCB. The company then went on to appeal in apex court which reduced the decision to a fine as a
warning.
Important financial figures: The turnover for the company increased from INR 83 crores in
1990-91 to INR 2925 crores in 1999-2000 and further up to INR 24,951 cores in FY 18.
Note: It is important to note that the company hasn’t reached stages of cash crises, insolvency, and
bankruptcy yet but the above the other stages of decline, underperformance, and downturn have been
discussed above without explicitly mentioning them considering the sequence of the stages. Also,
since the company continued to increase its production and on occasions against law, the company
didn’t have to see an economic crunch or down situation, until in the very late where the plant had to
be shut amid rising violence and protests.
It is important to note that while the company’s copper production had been on increase but the
company has lost significantly due to constant number of fines imposed against the company by the
courts and pollution control tribunals over times, the company is into two different business, one
being the copper business which is an important case point here. However, it is not the only business
the company operates in. There is one more business that company handles under Sterlite
Technologies, the company is into fiber optics. And, is a big supplier and backbone of the broadband
sector.
In the years, where the company was losing money due to closure of its plant in Thoothukoti, it wasn’t
the case with the other company business.
Turnaround:
The organization has paid significant focus on its broadband business and has continued to ascent its
path particularly during last years where it has it has grown through mergers and acquisitions,
particularly in the sector of telecom. The company not only worked on its image by making certain
changes in the name but also, grew larger and larger by mergers and acquisitions.
The company went under heavy consolidations but merging its own subsidiaries and then making a
focused approach in this sector. Apart from consolidating its sub-units, the company launched
significant other projects to cover a wide spectrum of products in this area. As a result the company
underwent significant changes to launch six projects in the area of broadband. In a significant
development the organization looked forward to cover the entire broadband network by launching a
program under direct to home fiber concept.
The organization heavily invested in fiber optics concept and reaped profits later on, as their numbers
increased almost six times.
Company later on made a strategic move to acquire Power Transmission Line divison and thus
ventured into electricity transmission business. This move costed the company around INR1485
million.
In the financial year of 2006-07, the installations made by the organization ranged from 2000000
CKM to 9500000 CKM for Fibre Optic Cables and by 822528 FKM to 3222528 FKM for Copper
Telecom Cables.

Q.3 Identify, define, formulate, and specify the problem or challenge of the company that lead
to its current distress in relation to its controllable versus uncontrollable variables
(environment). [20 Marks].
-Joseph Kuncheria [H18022]

The port based town of Thootukudi in southern part of TN, home to India’s largest copper smelter is
no stranger to controversies. Sterlite is owned and operated by Vedanta Limited is at the core of the
environment issue for the last two decades. The inhabitants of Tuticorin for very nearly 10 years have
been requesting its closure, referring to natural and wellbeing related dangers due to the factories
proximity to the town.
Copper industry, including mining, smelting and refining, is a dangerous industry that produces lethal
side-effects like lead, arsenic and sulphur oxides that harmfully effect water, soil and air quality.
Sterlite had originally decided to setup the factory in the coastal town of Ratnagiri in Maharashtra. In
1992, the organization was allotted nearly 500 acres of land by the Maharashtra Industrial
Development Corporation to establish the copper smelter in Ratnagiri.
Fearing the impacts of contamination and defilement of their environment, the inhabitants challenged
this for almost a year. Due to the rigorous protests by environmental enthusiasts backed by the support
of common people living in the vicinity, the district collector asked Sterlite to stop its construction.
Post this, within a year Sterlite was able to get approval to setup its factory in Tamil Nadu with all the
requisite sanctions from the then government of TN to start its construction. The local protestors in
TN were pushed aside and the copper smelter factory started its production in 1996.

Initially, there were dissents amongst local people for the fact that the plant was setup very near the
Gulf of Mannar, which is a delicate marine biological system.
Regardless of the proof from the National Environmental Engineering Research Institute (NEERI)
and the Tamil Nadu Pollution Control Board that Sterlite was defiling the groundwater, air and soil
with its effluents, no move was made.
A report distributed by the Tirunelveli Medical College found a high commonness of asthma,
pharyngitis, sinusitis and other respiratory tract diseases, all intermediaries for the nearness of hurtful
gases and particulate aggravations in the lower climate. They additionally found a mysteriously high
occurrence of menstrual issue, similar to menorrhagia and dysmenorrhea, in ladies living in the
region.
Vedanta, then again, has said that the challenges depended on false claims. Through every one of
these years, the organization has consistently expanded its ability by more than multiple times from
60,000 tons for each annum to more than 360,000 tons for every annum, regardless of steady run-ins
with different administrative bodies, challenge gatherings and activists.
Vedanta had been warned multiple times during its stay in Thootukudi from the TN pollution control
board but escaped and overcame each obstacle through its power and hold within the government.
Sterlite often denied all allegations put forward by environmental activists saying it had received a
clean chit by the district environment departments who had on multiple occasions investigated the
factory post allegations of leakage from common people staying within the vicinity.

The timeline for Sterlite from its first attempt to setup its factory in 1992 to the massacre in 2017 is as
follows:
1992 - Sterlite was ready to setup its first factory in Maharashtra/Gujarat/Goa. But it got tossed out
because of natural causes.
1994 – the then CM Jayalalitha of ADMK party established the Sterlite foundation stone in
Thootukudi district in TN
1996 – In the DMK Regime, TN Pollution Control Board (TNPCB) issued the plant a permit to work
( without looking for the NOC from Environmental Impact Assessment (EIA) )
1997, Locals started complaining of cerebral pain, headaches, coughing and stifling because of smoke
exuding from the plant.
1998, the manufacturing plant was shut by the Madras High Court for the reasons recorded by
National Environmental Engineering Research Institute (NEERI) for contaminating the groundwater
with arsenic, lead, selenium, cadmium, aluminium and copper
1999, inside 45 days of the prior report, NEERI gave clean chit to Sterlite to continue activity
2001, Tuticorin inhabitants griped about dangerous wastewater
2004, Supreme Court Monitoring Committee (SCMC) group discovered that a no of proposed
extension plants had been assembled as of now.
2004, Within couple of days, the Ministry of Environment issued a freedom accreditation for plants
built without consent.
2004, TNPCB presented its report affirming Sterlite was occupied with unlicensed creation
2010, the Madras HC requested the conclusion of Sterlite industrial facility for continually
discharging poisonous effluents in air
2010, Supreme Court issued remain on Madras High Court request, and gave free hand to Sterlite to
continue its unlicensed creation
2013, Locals at Tuticorin experienced suffocation, hacking, eye disturbance, unnatural birth cycles
and serious inconvenience because of gas spill.
2013, NEERI discovered enormous scale stores of risky synthetic substances in the ground around the
plant,
2013, TNPCB and other condition observing offices submitted confirmations against Sterlite towards
causing contamination.
2013, ADMK Jayalalitha/TNPCB issued a conclusion request as Sterlite's Sulphuric Acid Plant–I
recorded degrees of sulphur dioxide about multiple times as far as possible
2013, Sterlite discovered working without taking reestablishment assents from TNPCB. In any case,
Tribunal reported the TN Govt conclusion request as void. Cut least penalties(Rs.100 crore) yet gave
them free hand to work!
2016, TNPCB issued notice to Sterlite for dumping copper slag along the Uppar waterway and
dirtying the stream
2018, Sterlite Copper proposes to grow the office and include a second unit in the manufacturing plant
2018, Massive dissents began against Sterlite. On the 100th day of dissents, dissidents thronged the
Collector office requesting equity. Because of chain of savage occurrences, police opened flame on
the blameless regular folks partook in the challenges, causing life of 12 and harming 90+ regular
people.

The critical problems identified here is the lack of considerations for the environment by the
company. The clear overlook of Sterlite to the safety of common people has been the foundation of
the Thootukudi massacre. Sterlite’s strong intent of overlooking environment over its money minting
intentions created a ruckus that the common folk suffered.
While Vedanta has different metal interests, and has been blamed for huge scale rupture of law, human
rights and natural standards in practically the entirety of its tasks, here it will be adequate to
experience its copper history in light of the fact that the Thoothukudi slaughter is an immediate
aftereffect of Vedanta's copper advantages. Vedanta's quest for a site to find a copper purifying plant
in India began in the mid 90s. After fruitless exploring at first, the organization was given 500
sections of land of land in the grand beach front town of Ratnagiri for setting up a 60000 ton copper
smelter and related offices. In any case, this endeavor came a cropper with a solid people groups
development sponsored by prosecution of a court delegated master board headed by naturalist Rashmi
Mayur that constrained the Government of Maharashtra to arrange the organization to expand into a
non contaminating endeavor or empty. Given that the warmth in Ratnagiri was making it
unreasonably hard for Vedanta, they maneuvered out and moved into Thoothukudi in Tamil Nadu in
1994, where they were greeted wholeheartedly by the then administration of the state. While both the
major ideological groups in Tamil Nadu competed with one another in making Sterlite comfortable
and agreeable – the establishment stone of the plant having been laid by Jayalalitha of the AIADMK
and the plant appointed by her most outstanding adversary Karunanidhi of the DMK.
This alongside the clout that the organization appreciated with opponent association governments that
have been in power since Vedanta the 90s, with one previous association fund pastor notwithstanding
having served on the organization's top managerial staff, Sterlite began tasks with no ecological
consistence that must be taken from the Tamil Nadu Pollution Control Board or a the statutory
condition sway appraisal, apparently with the endowments of the association Ministry of Environment
and Forests. In spite of dissents from local people on the conceivable peril from the copper refining
units including arsenic and sulfur dioxide squander that could wreck nature of the land and
demonstrate lethal to the masses that began ideal from the time that Sterlite began activities,
occasional mishaps and various cases – Sterlite moved forward with no squares. At whatever point
they were closed down through government or legal requests, they figured out how to return inside
days. Indeed, even the Supreme Court of India has been excessively merciful in its way to deal with
Sterlite. In a request dated thirteenth April, 2013 – the Supreme Court found that Sterlite was
blameworthy of practically all infringement that it had been blamed for and criticized it while
shockingly enabling it to proceed with generation in the wake of paying a measly fine of INR 100
Crores (around USD 15 million). The blame for this massacre can be directly attributed to three key
parties, Sterlite, government and pollution board.

Q.4 Illustrate this problem by providing a brief historical background of the company, and a
more detailed background specific to the underperformance-decline-distress problem in
relation to its origin, importance, antecedents, concomitants, determinants and consequences.
Update company and market information on this problem [10 Marks]
-Priyadarshini Mukherjee [H18037]

STERLITE TECHNOLOGIES LTD. (STRTECH) - COMPANY HISTORY

Sterlite Technologies Limited formerly known as Sterlite Optical Technologies is primarily
engaged in the business of telecom products and solutions which mainly include integrated optical
fibre. Other telecom products such as fibre optical cables, copper telecom cables, structured data
cables and access equipment fibre connectivity and system integration solution offerings for
telecom networks OSS/ BSS solutions billing &bandwidth management solutions to organizations
and other service design engineering implementation and maintenance of Optical Fibre Cable
(OFC) Network. Sterlite Optical Technologies Ltd was incorporated on 24 March 2000 under the
name of Sterlite Telecom Systems Ltd. It was formed after the demerger of the telecom business
from Sterlite Industries (India) with effect from July 1 2000 to enable sharper focus on each of the
businesses. On 21 August 2000 the Company's name was changed from Sterlite Telecom Systems
Ltd to Sterlite Optical Technologies Ltd. The company has its manufacturing facilities at
Aurangabad and Pune in Maharashtra Silvassa in Dadra & Nagar Haveli and Haridwar in
Uttarakhand. In the year 2004-05 Sterlite Telecables Ltd a wholly owned subsidiary company
merged with another wholly owned subsidiary company called Sterlite Telelink Ltd. Also, in the
same year the company has launched their three new products which are especially designed for
Access and Premise Network. In the year 2005-06 the company has launched six new products for
Access Premise & Fibre-to-the-Home applications. In the year 2005-2006 the company has
increased the installed capacity for Fibre Optic Cables by 1400000 FKM to 2400000 FKM. Also in
the same year they stared a new project of producing Broadband Access Network. On July 2006
the company acquired the Power Transmission Line division from Sterlite Industries (India) Ltd
for a consideration of Rs.1485 million. In the same year the company's two wholly owned
subsidiaries namely Sterlite Telecom Ltd and Sterlite Telelink Ltd had merged with the Parent
Company. In the year 2006-2007 the company has increased the installed capacity for Copper
Telecom Cables by 2000000 CKM to 9500000 CKM for Fibre Optic Cables by 822528 FKM to
3222528 FKM and for Broadband Access Networks they increase the numbers by 120000 to
720000.

Copper Market in India :

Copper is one of the oldest and vital commodities which has a direct effect on history as well as
world economy. After steel and aluminum, it is the third most used metal in terms of world
consumption. Copper and its alloys are used in various industries the largest user being the
electrical industry due to the easy availability and affordability of copper, as well as its excellent
conduction of electricity.
India has been importing from countries like Chile, Indonesia, Australia and Canada with the
import of core and refined copper touching 1886199 thousand tonnes in the year 2015-16. India
has recently become an exporter of refined copper, 11432 tonnes approx. owing to the three major
players in the country, Birla Copper, Sterlite Industries and Hindustan Copper Ltd.
India’s domestic refined copper production had fallen significantly during the first half of 2018-19
mainly due to the shutdown of the 400-MT Tuticorin smelter of Sterlite which accounted for 40%
of the country’s copper smelting capacity.

Impacts of the Sterlite plant shutdown:

• It will create a temporary rise in the domestic prices in the physical market which could
impact downstream manufacturers also
• The plant has been operating for 22 years contributing to Tuticorin and the state’s socio-
economic progress, which will now come to an abrupt halt.
• It used to meet 36 per cent of the total domestic copper demand of the country. The
closure will now lead to increase in exports, as Copper is needed extensively in various
industries
• The closure of the plant will also lead to around 3600 people losing jobs, who were
employed in the sulphuric acid and phosphoric acid producing plants.
The problem due to the massacre:
One of India’s largest copper production plant, Sterlite copper, at Tuticorin is shut, which is going
to cost India USD 2.8 billion annually approximately. India produces less than 10 per cent of the
total copper production in the world, half of which is contributed by Sterlite. In 2017-18, the
company produced about 48 per cent of country's total copper output of 842,961 tonnes. Shutting
down the plant is likely to force India to import more. Before discussing what caused this, let’s
look at the timeline of the events that took place in Tuticorin :
May 1995: Environmental clearances given to the plant, construction begins
◼ October 1996: Plant starts operating, almost immediately clearances challenged before the
Madras high court
◼ August 1997: Protests begin after complaints of air and water pollution.
◼ November 1998: Interim order by the high court to close the plant, but reopened weeks later
after company agrees to put pollution safeguards
◼ January 2001: Complaints by locals of polluted water and release of toxic waste water from the
plant
◼ September 2010: Madras high court orders closure of the plant over pollution concerns but
reopened less than a week later after Supreme Court stays the order
◼ March 2013: Tamil Nadu pollution control board orders closure of the plant after a gas leak
◼ April 2013: Supreme Court fines Sterlite Rs 100 crore for pollution but doesn’t order closure of
the plant
◼ May 2016: Madras high court dismisses petition challenging expansion on the grounds that no
public consultation was held
◼ February 2018: Fresh protests after reports that Sterlite is looking to expand the plant and
increase capacity
◼ March 2018: Plant shuts for maintenance
◼ April 2018: Tamil Nadu pollution control board refuses to renew plant’s license
The Sterlite Copper has a history of public protests by locals for decades. Locals fear that the four
lakh metric tonne capacity plant releases harmful chemicals that are affecting people with
breathing problems and even cancer. The smelter, owned by Vedanta group was shut down
temporarily in 2013 due to similar accusations, but was not upheld by court. Recently four activists
were shot by the police who opened fire during the protests. Their killings should be probed given
that they were leading an agitation that had hindered the company’s plans to double its production
capacity.

Q.5 Discuss the competitive background specific to this problem: how did your company’s
major competitors succeed or fail in the same industry, market, trade, and product or service
Domain
-Priyadarshini Mukherjee [H18037]

First, we need to understand the industry of the Sterlite so as to objectively and rightly identify its
competitors. Its important to do justice to the objective evaluation considering that the company
has presence in copper related operations in multiple roles.
While one is related to copper manufacturing through the core smelting process, the other business
although related to copper is totally different in business which is related to manufacture of copper
intensive wires and transmission mediums.

Considering the obvious demarcation in the two industries differently and studied their competitors
separately.
We have identified the competitors of each major company as part of Sterlite group as:
The major competitors of Sterlite technologies are:
 Aksh Optifibre Ltd.
 Birla Cable Ltd.
 BWL Ltd.
 CMI Ltd.
 Finolex Cable Ltd.
 GR Cables Ltd.
 GTCL Mobile Com Technology Ltd.
 Gujarat Optical Communication Ltd.
 Gujarat Telephone Cable Ltd.
 Paramount Communications Ltd.
 Surana Telecom and Power Ltd.
 Tamil Nadu Communication Ltd.
 Vindhya Telelinks Ltd.
(Source: economic Times)

Things done better by competitors:

1. While the company is doing considerable well, the competitors have done well, in terms of
their expansion. The competitors made downstream acquisitions to create demand for the
cable products.
2. Another important area is to ensure long terms viability these have entered into long term
contracts with their customers particularly government
3. Lastly, they have based their plants close to markets.

The major competitors of Sterlite technologies are:

 India Copper Corporation
 The Hindustan Copper Ltd.
 Birla Copper Ltd.
 Swil Copper Ltd.
 Indo-Gulf Fertilizers

Things done better by competitors:

1. To begin with the above companies settled their plants in the economic regions dedicated
by the state government.
 2. The companies didn’t venture to go into new areas a part from the which were made
available to them under government’s land acquisition policy. This provided a further
advantage to them in terms of obtaining government support for future development.
3. The EIA were done on time and their was participation from locals which made them a
better participant of the process.
4. Not only this, the locals were given job opportunities and, in the cases, where they lost
lands, a proper settlement.
5. The organizations were particularly on point in their pollution norms and made
information available to general public. This was particularly true in the case of Hindalco
Ltd.
6. The trade unions were involved for a long-term settlement and obtaining fair working
conditions for the workers.

Q.6 Provide a financial (cash-flow) analysis of the company from its balance sheets, profit &
loss, and cash flow statements of recent years leading to the distress problem. Whenever
applicable, discuss how the underperformance of the company affected its market shares,
ROS (return on sales), ROI, ROQ (return on quality), market valuation, Tobin’s Q, EPS, P/E
ratios, and net worth. Do analysis based on Appendix 1.3. [20 Marks]]
-Pavneet Kaur [H18034]

On analyzing the financial data of Vedanta it is being observed that the Company’s profit saw a huge
growth in the year 2017 as compared to 2016 but again the profit went down in the subsequent years
(2018 and 2019).A closer look at the financial statements reveals that the debt decreased in the
subsequent years. The company saw huge profit in the year 2017 but after that the ROE decreased.
Average equity of the company over the span of 4 years remains almost the same. The decrease in
profit in the year 2018 and the year 2019 was mainly due to the shutting down of the copper smelter
plant in Tamil Nadu which forced the company to depend on imported copper. This lead to increase in
the Chinese smelter’s output by 4.2% in the financial year 2018-2019.1Increased import of copper
lead to a loss of 20,000 crores to the economy
Analysis of Company XYZ’s “Satisfactory Underperformance”
Performance Variable Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2016 2017 2018 2019
Net Profits ($Million) -11,906.23 11,069.00 7,256.00 5,075.00
Annual Growth in Profits 192 -30 -30
Total Equity ($M) 79,237.44 79,768.0 82,323.00 77,880.00
Total Debt ($M) 109856.18 36,557.00 30,120.00 30,618.74
Return on Equity (ROE) -15.026 13.87 8.81 6.51
Cost of Capital (Interest 11.34 13.18 3.28 -5.22
Rate)
Value Destruction as %: 3.686 0.69 5.53 1.29
(Cost of Capital – ROE)
(magnitude)
Value Destruction as $M: 40492.9087 252.2433 1665.636 3591.578202
(Cost of Capital -
ROE)*Debt

1https://www.thehindubusinessline.com/companies/vedanta-lost-200-mn-in-profits-in-one-year-of-tuticorin-
plant-shutdown-anil-agarwal/article27955361.ece)
2
https://www.thehindubusinessline.com/companies/sterlite-copper-unit-shutdown-led-to-rs-20k-cr-loss-to-
economy-ceo-p-ramnath/article24562053.ece
Net Profits after adjusting NA 10816.7567 5590.364 1483.43
for Value
Destruction based on Cost
of Capital
($M)
Risk-free returns (RFR): 6 6 6 6
(FDIC or Banks)
Value Destruction against - -7.87 2.81 -0.51
Risk-Free
Returns as %: (RFR-ROE)
Value Destruction as $M: - 2877.03 846.372 156.15
(RFR-ROE)*Debt
Net Profits after adjusting 8191.97 6409.628 4918.85
for Value
Destruction based on Risk
Free Return
($M)
Net Profits after adjusting 7939.7267 4743.992 1327.28
for value
destruction based on both
cost of
capital and RFR ($M)

As per the understanding of Appendix 1.3, the concept of satisfactory underperformance cannot
be applied to the Vedanta Case. There was a drop in profit and the debt in the year 2019 compared
to the previous years. The total equity also remained the same in the subsequent years.

The total liabilities of the company has been increased to 124519(ten million) from 105333(ten
million) in the year 2019 as compared to 2018 (an increase of 18.21%) 3
Vedanta’s Tobin Q value is found to be 0.08 4which indicates that it costs more to replace the
company’s assets than the company is worth. It indicates that the cost to replace Vedanta’s asset is
greater than the value of the stock
Market Capitalization (Market Cap) measures value of the business based on price of the share and
outstanding shares.
5
It can be analysed from the graph that the market valuation experienced a drastic fall in the year
2019.This is basically due to the shutting down of the sterlite plant. Return on Asset The return on
asset in the year 2019 is 3.41 compared to 4.66 in the year 2018.A drop of 26.82% indicating a
decrease in profitability of the company
Return on Sales =14.15% (The return on sale was 14.70 in the year 2018,18.14 in the year 2017 and
16.98 in the year 2016) 6. Making the sterlite industry dysfunctional in Tuticorin impacted the
economy.
3
https://www.emis.com/php/companies/index?pc=IN&cmpy=1629169
4
https://uk.advfn.com/stock-market/london/vedanta-VED/financials
5
https://ycharts.com/companies/VEDL/market_cap
6
https://www.moneycontrol.com/financials/vedanta/ratios/