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Business Report “Examining the causes of Failure”

On

Vedanta Alumina Lanjigarh Project

Submission date 13th December, 2010

Submitted bySId- 7636657

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Executive Summary –

MOE&F, INDIA rejected the application for Stage-2 (Final) Environmental Clearance and withdrew all the previous clearances for mining in Niyamgiri Hills given to Vedanta Alumina Ltd. (VAL) a subsidiary of Sterlite Industries INDIA Ltd. (SIIL) citing various facts and reasons. This report provides an in depth analysis of the factors that lead to the debacle of Vedanta Alumina Lanjigarh Project. In the collation and presentation of data Secondary sources have been largely used. Vedanta, being a big Corporate house with ample experience was well aware of the rules and legislations prescribed under the law but deliberately Indulged in malpractices and ignored the key issues when it came to the Implementation of the Robust Business Strategy as a part of unnecessary haste. This project is a complete failure as the main purpose of setting up of refinery at Lanjigarh was the mining from nearby Niyamgiri Hills which was rejected by MOE&F, INDIA. Main factors that contributed to the failure of Vedanta Project are primarily indulging in unethical and illegal practices to kick-off the project and ignoring the key stakeholders of the project i.e. Dongria Kondhs who are the inhabitants of the Niyamgiri Hills (Proposed mining Lease Area). The only ray of hope for Vedanta to make this project a success in terms of hindsight is to abide by the existing Rules and Legislation, satisfying Key stake holders and then pursue the matter again with MOE&F, INDIA.

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Table of Contents

Serial number 1.0 1.1 2.0 3.0 3.1 3.2 4.0 4.1 4.2 4.3 4.4 4.5 5.0 6.0 7.0 8.0 9.0

Topic Introduction Methodology Success and Failure Vedanta Vedanta Alumina Lanjigarh Project Chronology Of Events Causes of Failure Ecological Costs Human Costs Violations of FRA Violations of FCA Violations of EPA Failure in OGC Framework Lessons to be Learnt Recommendations Appendix References

Page no 4 4 5 6 6 6 9 9 9 9 9 10 10 12 12 13 15

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1. INTRODUCTION
Vedanta Alumina Ltd. (VAL) is an associate company of globally diversified, London Stock Exchange listed, FTSE 100 metals and mining group Vedanta Resources PLC. As per the MoU reached between Sterlite Industries (INDIA) Ltd. (SIIL) and Orissa Mining Corporation (OMC), INDIA on 7th June 2003 SIIL would set up an 1.0 MTPA Alumina Refinery Plant, 3.0 MTPA of bauxite mining from the top of nearby Niyamgiri Hills and 75 MW captive Power plant at Lanjigarh in the district of Kalahandi, Orissa (INDIA) at an estimated cost of $1.7 Billion. As per the lease agreement signed on October2004 Vedanta Alumina Ltd. (VAL) a subsidiary of SIIL jointly with OMC will mine Bauxite from Niyamgiri hills that forms a mountain range located in the eastern part of INDIA and is about 250 sq.km in area lying between 19.33 degree N lat. and 83.25 degree E longitude {1}. Naturally gifted abundant Flora & Fauna, it too have large amounts of Bauxite in form of localized pockets up to a maximum depth of 30-35 metres which makes it an ideal place for Investment by Mining giants. Niyamgiri Hills are primarily associated with the Dongria kondhs that are one of the primitive and scheduled tribes of the state. According to the Rapid Environmental Impact Assessment (REIA) for SIIL prepared by the TATA AIG Risk Services Management Ltd. (TARSM) the estimated reserves of Bauxite are 73 MILLION tons and will last about a life span of 23 years.

Major emphasis in this report will be on the –
 Rejection of Stage – 2 Environmental clearance for mining sought from Ministry of Environment & Forests (MOEF), INDIA by Vedanta Alumina Ltd. and revocation of Stage-1 clearance previously given on the recomendation of Forest Advisory Committee (FAC) dated 24th august,2010 based on the report of N.C.Saxena panel headed by Dr. Naresh Saxena. Insights will be developed and critical analysis will be done to examine what caused to the apparent failure of the Mining project and repercussions persuaded by Vedanta Alumina Ltd. Lessons to be learnt report will be prepared so that in future these sort of project failures can be avoided to save Time and Money of Corporate Houses.

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1.1 Methodology The data collected will be seconadary in nature and no primary research will be done i.e. Researches, Documentation, Reports available, Journals, Company website, Online news, MOEF website, Independent reviews conducted. Success and Failure will be defined in the terms of project with particular reference to OGC gateway Framework. 4



2.0 Success & Failure Success in terms of project management is very hard to define, The most common method used to define success is in terms of Project Management Triangle i.e. Cost, Quality and Time . In addition to the Project Management triangle there are other variables that have been added to define success known as square root. As project management is a learning profession , based on the past mistakes and ideas there are numerous theories and suggestions that have developed or developing. But, then the question arises what is the best criteria to define success or Is there a single framework or model that can be used to define success??. In a nutshell , it can be said that there are numerous ways to define project success but the most important are in terms of Cost (Total cost of the project undertaken), Time (Devoted time to complete the project), Quality (Value delivered by the project), Stakeholders Satisfaction ( Deliverables should met with the expectations of the People, Groups or Organisations who possess a keen interest in the project) and the Objectives aimed for are achieved .Failure, in contrast to Success, is when the project undertaken doesn’t deliver the objectives it aims for like meeting the expectations of the stakeholders or overrunning in terms of Cost, Quality, Time . Though it is not the perfect definition to the Success and failure of the project but broadly it covers all the major issues that organisations look for.

{2}

{2}

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3.0 Vedanta {3}
   Vedanta Resources is an LSE listed- diversified FTSE 100 metals and mining company, and India’s largest non-ferrous metals and mining company based on revenues in excess of $ 6 billion. Headquartered in London with a workforce of 30,000 employees including over 8000 professionals worldwide. Primarily engaged in Copper, Zinc, Aluminium and Iron ore businesses with additional assets and operations in Zambia and Australia.

3.1 Vedanta Alumina Lanjigarh Project {3}
 Vedanta Aumina Limited is a subsidiary of Sterlite Iindustries (INDIA) Limited . According to the MoU signed between SIIL and Government of Orissa, INDIA on 7th June, 03 SIIL would set up an Alumina Complex which includes 1.0 MTPA Alumina Refinery Plant , 75 MW Captive power plant and 3.0 MTPA of Bauxite mining at Lanjigarh in the district of Kalahandi, Orissa at an approx. Invesment of $1.7 billion. As per the lease agreement signed in between Vedanta Alumina Limited (VAL) and Orissa Mining Corporation (OMC) in October 2004, SIIL will mine Bauxite jointly with OMC from the top of nearby Niyamgiri hills.



3.2 Chronology of Events that occurred {4}
  Memorandum of Understanding signed between Sterlite Industries of INDIA Limited (SIIL) and Orissa Mining Corporation (OMC) for development of bauxite mines and refinery in April 1997. On 6th June, 02 Land aquisition and Gram Sabha Notice issued to the villagers for the proposed “Lanjigarh Alumina Refinery Project”. As per the notice 12 villages would be razed, 60 families displaced and 302 families would loose their farmland when the project will be materialised. M/S Sterlite (SIIL) filed an application for environmental clearance from the MOEF, Government of INDIA for the propesed refinery on 19th March, 03. It was clearly stated that no forest land is involved in this project hiding the fact that about the requirement of 58.9 and that there was no reserve forest within a radius of 10 km of Project site. 6







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On 7th June, 03 MoU was signed between SIIL and Government of Orissa, INDIA for setting up of 1.0 MTPA Alumina refinery plant, 3.0 MTPA of Bauxite Mining and 75MW captive power plant at Lanjigarh. On 24th March, 04 MOE&F, INDIA communicated to Vedanta that the ministry would consider the two projects together as the refinery would be dependant on the minig project. In response to this Vedanta argued that it would take them 3 years to build the refinery and only a year to open up the mines. On 16th August, 04 a separate petition was filed for Clearances under the Forest Conservation act (FAC), 1980 through Orissa Industrial Infrastructural Development Commission. On 22nd September, 04 MOE&F ,INDIA granted the environmental clearance for the refinery project on the condition that Sterlite got mining Clerance before “Operationalising” the refinery unaware of the fact that a separate application for forest clerance was also pending since it was clearly stated that no forest land was involved in the project. In October, 04 lease agreement was signed between SIIL and OMC to mine Bauxite from the Niyamgiri Hills. Furthermore in November, 04 Show-cause notice was served by Orissa’s Forest Department for encroaching on 10.41 acres (4.21 ha) of village forestland for its refinery, in the mean time several activists petitioned Central Empowered Committee (CEC) to halt Company’s Operations. Site inspection carried out in December, 04 by fact finding team of CEC appointed by the Apex Court of INDIA. On 28th February, a proposal was forwaded by the Government of Orissa, INDIA for the diverion of 660.749 ha of forest land for mining purposes in the favour of OMC. On 23rdMarch, 05 after the question of validity was put forward by CEC, MOE&F directed VAL to halt construction work till was given for the 58.9 ha of forest land with in the refinery compound. In a very quick occurence of events the very next day, VAL dashed off a letter to MOE&F, INDIA seeking withdrawal of its request for 58.9 ha of forest land. The state government did the same by forwarding a letter recommending withdrawal of the proposal 27th March,05 as a result of this the ministry withdrew its Stop work order. In the report submitted by CEC on 22nd September, 05 it was recommended that no mining should be permitted on Niyagiri Hills and futhermore recommended that Environmental Clearance given for the Alumina Refinery plant in 2004 should be revoked. In September, 06 the matter was refferred to MOE&F, INDIA forest division (FAC) and report was asked in three months. With the issue pending in the Apex Court the company started operating the refinery from its own mines in Chattisgarh, INDIA. On 27th October, 07 MOE&F, INDIA recommended “in principle” approval stipulating certain conditions like concurrent reclamation, minimum tree falling in a phased manner etc. In the very judgement delivered on 23rd November, 07 Apex Court laid certain conditions that have to be fullfilled by the company before the clearance could be given, one such condition was that only SIIL or OMC would be charged with the execution of the project and in any form the Parent Company Vedanta not to be involved. In a second judgement on 8th August, 08 the Apex Court granted clearance for the diversion of 660.749 ha of land for bauxite mining on Niyamgiri Hills. 7



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MOE&F, INDIA formally issued the “in principle” approval to the state government on 11th December,08. Further in April 2009 forest clearance was given for an additional area of 33.73 ha. On 10th August, 09 application was moved by State Government before MOE&F, INDIA for the final clearance. As per the meeting of FAC on 4th November, 09, FAC recommended that final clearance to be given only after ascertaining community rights on the forest land under the under the Forest Rights Act (FRA), 06 is completed. On 1st January, 10 a three memeber Expert Committee constituting Dr. Usha Ramanathan, Shri Vinod Rishi and Shri J.K.Tiwari was set up to consider and make recommendations to MOE&F, INDIA on the proposal submitted by OMC. After carrying out site visits during January and February 2010, three individual reports were submitted to MOE&F, INDIA on 25th February, 10. Another meeting was convened by FAC on 16th April, 10 in which it was decided that a Special committe to be set up to look in to the violation of Tribal Rights and others under (Recognition of Forest Rights Act), 06. On 29th June, 10 a panel was created constituting Dr. Naresh Saxena, Dr. Amita baviskar, Dr. Promode Kant and Dr. S Parasuraman under Dr. Saxena by MOE&F to look into the implementation of Scheduled tribes and FRA, 06. The Saxena collated its findings and submitted it to MOE&F on 16th August, 10. As the findings were against the Final clearance to be granted and about the revocation of Previous Clearances the State Government on 17th August, 10 requested for a personal hearing before any decision is taken. As the Saxena’s Report held in high regard and placed before FAC on 20th August, 10 with series of meeting conducted between 23rd and 24th August, 10 with the Chief Minister of Orissa, INDIA and other officials of the State, MOE&F , INDIA finally rejected the Stage-2 Clearance and withdrew all the clearnces previously given giving a SHOCK to the Company dreams and its future prospects of mining on the Niyamgiri Hills.

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4.0 Causes of FAILURE {5}
Reasons for Final clearance rejection by the MOE&F,INDIA and revocation of the all the previous clearances given on 24th August, 10 and holding of the construction work for the expansion of the refinery from 1MTPA to 6MTPA are stated below –

4.1 Ecological Costs {5}
   Mining operations of the intensity proposed will severly disturb the important wildlife that has been proposed as a part of Niyamgiri Wildlife Sanctuary. More than 1.21 lakh trees need to be cleared as a prt of mining process apart from this it will also destroy the valuable “edge effect” of grassland landscape. Region’s water supply will be drastically hit severly affecting both ecological systems and human communities dependant on this water.

4.2 Human costs {5}
  The mining will directly affect 1453 Dongria Kondhs who are about 20% of the total population of 5148 persons from 28 Kondh Villages. It will threaten the well-being of the entire community that are heavily dependant on the forest produce for their livelihood, besides this it will also have cultural, social and economic effects.

4.3 Violations of FRA {5}
 The provisions of the FRA Act have not been followed by the State Government and well established rights of Kondh Primitive Tribe Groups have been deliberately disregarded, the only course of action suggested is the revocation of Stage 1 Clearance given under the FCA. FRA Act not implemented in an impartial and fair manner, moreover false certificates were provided by the State Government making a Clear path for the project. Mining will not only destroy one of the most sacred sites of Kondh Primitive Tribal Groups, it will also destroy seven kilometres of sacred undistributed land and will seriously harm the lives of hundreds of dalit families.

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4.4 Violations of FCA {5}
 Company is in illegal possesion of 26.123ha of forest land within the factory premises with a false claim that they have only followed the State Government orders and will provide access to tribals and other villagers to their forest land. Company is also in illegal possession of plot number 157 measuring 1.0 acre and plot number 133 measuring 0.11 acres of village forest lands.



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4.5 Violations of EPA, 1986 {5}
 Company already proceeded with the construction activity for the expansion of refinery from 1MTPA to 6MTPA without obtaining environmental clearance as per provisions of EIA Notification,2006 under the EPA. The condtion on which EPA Clearnace was given for 1MTPA was not taken care of as the company has occupied 26.123 ha of forest land within the factory premises against the condition being set. Mining activity with in the proposed mining area will have very little significance as with the six fold expansion the Bauxite reserves of 72 million ton ore will last for only 4 years.





With the violations of certain norms and conditions by Vedanta, MOE&F (INDIA), On the recommendations of Saxena Panel and other expert committees costituted by the ministry to look into the project, finally decided to reject the application for Stage-2 Clearance required for mining and revocation of Stage 1 Clearance initially given on 24 th August, 10. Apart from this, MOE&F also decided to halt the six fold expansion and suspend the working in the refinery, later on being satisfied with the reply of the company allowed the company to operate 1MTPA refinery plant.

5.0 Failure in terms of OGC framework {6}
OGC Project reviews are carried out under the OGC Gateway Reviews 1-5, that a project will undergo during the lifecycle- three before commitment to invest and two looking at the service implementation and confirmation of the operational benefits. Review 1: Business Justification This stage is conducted after the Strategic Business Case has been prepared and it’s a way to figure out whether the project is feasible or not. OGC Gateway Review Process for Vedanta is as under –  The strategic Business Case prepared by Vedanta have been very robust as very clearly it links the project to Vedanta’s Dreams of being the biggest mining player in the world with the lowest operational cost, as Niyamgiri Hills possess huge amounts of bauxite that is easily extractable and convertible to Aluminium at the lowest cost providing an edge.  All the stakeholders namely Union of INDIA, Government of Orissa (INDIA) and Dongria Kondhs, at a larger picture were taken into Confidence, in spite of, slight discontent among the Kondhs and Environmentalists. Review 2: Delivery Strategy This stage investigates the assumptions in the Outline Business Case and proposed approach for delivering the project. Review is as under –  The objectives and the benefits that Vedanta Alumina was going to derive were in accordance with the Strategy and the Vision of the Parent Company Vedanta Resources Plc.  Growing discontent among Dongria Kondhs and the Environmentalists on the issue of mining were not taken care of and were downplayed by the company, this is the first step that VAL took towards its own downfall, as one of the prime Stakeholders were not on a mutual platform. 10

Review 3: Investment Decision In this stage the full Business case and the Governance arrangement for the Investment Decision are fully reviewed to justify that the project is still affordable and reachable in its approach. Review is as under –  This review confirms that Objectives and outcomes of the project were still aligned with the Organisation’s Business Strategy or we can say Corporate Strategic Vision.  Lack of concern for the growing discontent among the stakeholders was witnessed by the company in forms of protests by the Dongria Kondhs, Complaint to CEC. As a result of this Vedanta was continuously losing ground support for the project.  Lack of Contingency Plans for Risk Management, Issue Management was seen in the picture. Review 4: Readiness for Service This stage reviews the readiness of the organisation to make the transition from the specific/solution to the implementation. Review is as under –  Here is the crucial point where Vedanta lost all its focus and was so highly motivated to Kick off the Project that it adopted unethical and Illegal practices in completing the necessary formalities and broke the guidelines and rules prescribed by the Law, to name a few Fake Gram Sabha Certificates showing the consent of Dongria Kondhs, Illegally occupied Forest Land, Going ahead without obtaining necessary clearances from the Government and expansion of the Refinery violating EPA. Various Committees and panels were set up by the Union of INDIA and the Apex Court amidst numerous complaints filed against Vedanta as a result of which MOE&F,INDIA rejected the application moved for the Final Clearance awaited for mining and revocation of all prior clearances given, details can be found in the Chronological order of events. Apart from this Vedanta too faced repercussions of this on their Refinery Plant at Lanjigarh that had to go under 6 fold expansion from 1MTPA to 6MTPA, having a devastating effect on the company’s image, Enquiry was put in place for the other mining areas from where Bauxite was currently sourced and most importantly eroding the Company’s Share Prices. Detailed Insights can be found in the Causes of Failure stated earlier. In terms of OGC Framework, Vedanta’s Alumina Lanjigarh Project is a failure as the Prime objective of setting up of refinery at Lanjigarh was the mining from the Niyamgiri Hills which have been rejected at the moment and is very unlikely that it will be approved. Vedanta experienced failure when they were in the transition phase of Implementation.

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6.0 Lessons to be Learnt
 The first and the foremost thing that can be concluded from the above case is that Companies should always look towards their stakeholders before any project is proceeded because if any of the stakeholders are not satisfied it can prove very fatal sooner or later as it can be clearly seen from this case of Vedanta Alumina Limited (VAL). The companies should give utmost importance to the prescribed rules and legislations as ignoring them may prove very risky at a very crucial stage as a considerable amount of Time, Money, Image and other assets of a company are at stake. In the above case of VAL it can seen that Vedanta suffered a huge loss in terms of it’s Image, Decline of share prices, Loss of Resources in terms of Valauable Time and Money and a huge setback in achieving Strategic Goals and Objectives. Companies should also make a considerable note of Political and cultural factors as both of these factors play a very vital role in deciding the future of Company’s dreams. In the case of Vedanta it can be seen that politics played a very important role when the Opposition parties and other political outfits stood against the company in the realisation of its dreams.





7.0 Recommendations
The one and only recommendation that I will give is that Vedanta should fully oblige to all the Rules and Legislations prescribed under the law and should thrive to strike a chord with the key stakeholders i.e. Dongria Kondhs before it pursues the matter again with the MOE&F,INDIA so that the Project successfully sails through as there is silver lining shown by the MOE&F,INDIA that it can consider the project again if Vedanta complies with all the rules and Conditions making it a success in terms of Hindsight.

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8.0 Appendix
Here under are summed examples of some of the projects that were successfull on some aspects but failed miserably on the other aspects-



Sydney Opera house overran it’s cost 16 times and consumed 4 times more than the time and cost originally planned but the final impact that it created was so big that it completely overshadowed missed goals. It’s a big success for the people as it met the expectations of the people for whom it was constructed at the same time a big failure from the project management perspective. Millenium dome in London on the other hand was a project that was completed with in the defined time and budget but considered as a failure as it wasn’t able to deliver what was expected out of it . Heathrow Airport Terminal 5 is a perfect example where opening is associated with no less than a failure despite six months of testing but generally the delivery phase is considered as success after not so perfect opening.





Terminologies Used –
              SIIL – Sterlite Industries India Limited VAL – Vedanta Alumina Limited REIA – Rapid Environmental Impact Assessment TARSM – TATA AIG Risk Services Management Limited MOEF – Ministry of Environment and Forests, INDIA FAC – Forest Advisory Committee LSE – London Stock Exchange OMC – Orissa Mining Corporation MTPA – Million Tonnes Per Annum FCA – Forest Conservation Act, 1980 CEC – Central Empowered Committee FRA – Forest Rights Act, 2006 EIA – Environmental Impact Assessment EPA – Environmental Protection Act, 1986

Impact of mining on health
 Chromium and hexavalent chromium, which has contaminated Orissa’s food chain, are toxic and exposure to either of these compounds lead to inflammation and irritation of eyes, peptic ulcers as well as marked irritation of respiratory tracts and nasal passages. Hexavalent chromium is known to adversely affect women’s health in particular. Coal dust pollution of air, water and land affects respiratory health in coal mining areas of Orissa, which cover about two hundred villagers in six blocks of three districts. Burning of coal for refining and thermal power produces fl y ash which contains florosis. Red mud, which is produced when bauxite is processed into alumina and which contains iron oxides, silica, zinc, phosphorus, nickel, among others, causes skin diseases.

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A number of studies and surveys have revealed that mining workers and communities living around mining areas are exposed to silica. There is also more incidence of tuberculosis among the mine workers of Orissa.

Alumininum- Where it comes from and from it goes –PUDR (2005)
Aluminium production consists of three processes: mining the bauxite, refining the bauxite to alumina, and smelting alumina to make aluminium. In India, producing a ton of aluminium needs two tons of alumina and each ton of alumina needs three tons of bauxite. These processes are inexpensive in India compared to international standards due to multiple factors: one, Indian bauxite is less impure, which translates into lower power consumption in smelting; two, Indian bauxite is close to the surface, which makes access easier and cheaper; and, three, electricity and, crucially, labour in India is relatively cheap. Mining bauxite in India costs a quarter of the world average and producing aluminium is 25-30 percent cheaper. Huge bauxite reserves, one billion tons, were unearthed in Orissa and contiguous parts of Andhra Pradesh in 1995, making India a fairly significant player in the bauxite and aluminium market worldwide. India currently has about three billion tons of known bauxite reserves, the fifth largest in the world, nearly 60 percent of it in Orissa. India’s aluminium production – over 7 lakh tons in 2003 – already comfortably meets domestic demand and 1.65 lakh tons are currently exported. India’s aluminium demand – 6 lakh tons in 2004, or 0.6 kilograms per person per year – is very low compared to 15 kilograms in Japan and 25-30 kilograms in the US and Europe. Over half of the aluminium worldwide and in the developed world is consumed by the packaging and transportation. Aluminium is also used hugely in defence weaponry and aircraft. In the coming years, more Indian aluminium will be exported: it is expected to jump sixfold to a million tons a year by 2010. This will intensify with the entry of huge foreign companies to facilitate deeper links to globalised production processes and markets.

The Sterlite Project
The Sterlite project, which falls in a “Schedule V” area, runs counter to the spirit of the Supreme Court ruling that not only prohibits sale of land, government or private, in Schedule V areas to nonAdivasis, but also bars mining leases or prospecting licenses to mining companies. However, the Government of Orissa performed a legal sleight of hand by arguing that the transfer of land for development activities, establishment of industries, and operation of mining leases in these areas would bring about encouraging socio-economic development of the adivasi population. Sterlite’s proposed mining site holds some of Orissa’s most bio diverse forests with an impressive crown density of over 40 percent. It is home to the endangered Indian tiger apart from leopards, sambars, bisons, and a host of species. Streams and springs sprout on Niyamgiri’s Northern ridges, giving birth to Vamsadhara, the only river of the region. There is an urgent need for conservation here.

Here under is a list of hyperlinks to the websites that can be used for in depth insights –
     http://www.cseindia.org/node/1680 http://www.cseindia.org/userfiles/MoEF%20decision%20on%20grant%20of%20forest%20cleara nce.pdf http://www.cseindia.org/userfiles/Report%20of%20the%20Central%20Empowered%20Committ ee%20(CEC).pdf http://www.cseindia.org/userfiles/CSE's%20technical%20analysis%20%206%20MTPA%20project.pdf http://www.grain.org/seedling/index.cfm?id=609 14

  http://lanjigarhproject.vedantaaluminium.com/lanjigarhproject.htm0238045755656537084850 26.html http://online.wsj.com/article/SB10001424052702304

9.0 References
1. {1} – Daspatnaik P.1984, Adivasi (Journal of the Harijan and Tribal Research Institute, Bhubhaneshwar), January. Patnaik, N. And Daspatnaik, P.1982, the Kondh of Orissa 2. {2} -- en.wikipedia/wiki/Iron_Triangle, ww.ittoday.info/Articles/IronTriangle.htm, International Journal of Project Management (R. Atkinson) 3. {3} – www.vedantaresources.com, www.vedantaaluminium.com 4. {4} – www.moef.gov.in, www.cseindia.org 5. {5} – http://ibnlive.in.com/news/govt-rejects-vedanta-mining-project-in-orissa/129486-3.html, www.deccanherald.com, www.foxbusiness.com, en.wikipedia.org/wiki/Vedanta_Resources, londonminingnetwork.org/2010/08/Indian-government-says-no-to-vedanta/, news.bbc.co.uk/1/hi/world/south_asia/7486252.stm, www.moef.gov.in, www.cseindia.org 6. {6} – www.ogc.gov.uk/what_is_ogc_gateway_review.asp

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...1. The four basic variables of the time value of money (TVM) equation are: FV = future value PV = present value r = interest rate, yield, discount rate or growth rate n = the time period between the present value and the future value These variables can be arranged in several ways to solve many questions about money. The most basic form of the equation is FV = PV x (1+r)^n Example: if I have $1,000.00 in my bank account today earning 5% interest for a period of 10 years, what is the future value? FV = 1000 x (1+.05)^10 = $1,628.89 When the interest (growth) rate increases, future value increases as well. Example: if I have $1,000.00 in my bank account today earning 10% interest for a period of 10 years, what is the future value? FV = 1000 x (1+.10)^10 = $2,593.74 Discount rate is the opposite of growth rate. When the discount rate increases, present value decreases. 2. A series of payments can be described as making payments at regular intervals in varying amounts. In other words, if I make payments to a creditor on the 5th day of every month for 1 year, with each amount being different depending on my purchases that month, I am making a series of payments. An annuity, on the other hand, is a series of equal payments at regular intervals. If I make all my payments for $100.00 to a creditor on the 5th day of every month, this is considered an annuity. These are typically found in contractual obligations or other similar legally binding agreements...

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...Abstract In this paper, Team C will discuss the concept of the time value of money and the importance of this concept in business. Also, we will provide a demonstration of the use of the formula used to calculate the present and future values of money to get the present value of $100 using different periods of time and interest rates. Time Value of Money In the world of business, it is essential to know what TVM represents and how it helps make better choices in how we spend our money. TVM is also known as Time Value of money which is a given amount of interest earned in a period of time (Wikipedia, 2011). Each member in group “C” will use 100 as our present value and we will choose an interest rate and period. Time value of money concept is used to determine present and future values of money. “The time value of money refers to the relationship between time, money, and the rate of interest.” (Letsche, 2011). The formula consist of four components FV = Future Value, PV = Present Value, i = the interestrate per period and n= the number of compounding periods (TeachMeFinance.com). In business, TVM is used to evaluate expected returns on investments and monitoring the company’s cash flow. “However, understanding the time value of money is also very important for you as an self-employed business person to make sure you are able to realize your spending, purchasing and retirement goals.” (Loughran, 2011). On a personal level, individuals can use TVM to calculate interest...

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...Time Value of Money Managerial Finance II/FIN476 October 21, 2007 Time Value of Money The Time Value of Money (TVM) serves as a foundation for all other notions in finance. It influences business finance, consumer finance and government finance. Time Value of Money (TVM) results from the concept of interest. Time Value of Money (TVM) is an important concept within the financial management. It compares investment alternatives and then to solve problems, which involving loans, mortgages, leases, savings, and annuities. “In determining the future value, we measure the value of an amount that is allowed to grow at a given interest rate over a period of time” (Block & Hirt 2005). “Why would any rational person defer payment into the future when he or she could have the same amount of money now? For most of us, taking the money in the present is just plain instinctual. So at the most basic level, the time value of money demonstrates that, all things being equal, it is better to have money now rather than later” (Croome 2003). The concept of Time Value of Money (TVM) is that the dollar that company has today is worth more than the promise or expectation that the company will receive a dollar in the future. Money, which a company holds today, is worth more because the company can then invest it and earn interest. Therefore, a company should receive some compensation for foregoing spending. For instance, a company can invest their dollar for one year at...

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...Time Value of Money I recently opened a Roth IRA account in 2014. Being in my 30’s already, I got started a tad bit late but nonetheless I’m planning for my retirement now. My main focus is to maximize contribution each year and allow for it’s steady growth so that I can afford to sustain my lifestyle after I retire. I plan to save at least a million dollar for my retirement. Although there are not any tax deduction provisions for Roth IRA, the earnings are tax-free. So, in the long run it will be beneficial, as I don’t have any plans to withdraw the money until I retire. I opened the Roth IRA account with $3500 at the end of 2014 at the age of 30. I intend to contribute $3500 at end of every year till the age of 65 years, which will be my retirement age. The annual expected return from investment is 7%. Since, I will be making a series of equal payments at fixed intervals for a specified number of time and doing it at the end of every year, the future value will be- PMT= $ 3500 I=7% N=35years FVA=? FVA=PMT [(1+I)^N-1÷I] FVA= 3500[(1+0.07)^35-1÷0.07] = $483829.10 So, if I stick to my current plan, I will only be able to save $483,829 at the age 65. Lets assume if I fulfill the maximum contribution of $5500 each year with same expected annual return of 7%, then my savings will be- PMT= $ 5500 I=7% N=35years FVA=? FVA=PMT [(1+I)^N-1÷I] FVA= 5500[(1+0.07)^35-1÷0.07] = $760302.83 It looks like although I make maximum contribution each year, I won’t...

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...Introduction The time value of money concept is fundamental to the analysis of cash inflow and outflow decisions covering periods of over one year. Additionally, the concept of time value of money is important to financial decision-making because it emphasizes earning a return on invested capital, recognizes that earning a return makes $1 worth more today than $1 received in the future and it can be applied to future cash flows in order to compare different streams of income. A dollar to be paid or received in different time periods will have different values. For instance, a dollar today is worth more than a dollar in two years from now. This is because we can invest the dollar today, which will earn us a rate of return (interest) and create an increased value in two years. This process is called compounding and it involves taking a dollar today (present value), and investing it so that it grows into a larger amount in the future (future value). Additionally, managers must also understand factors which affect time value of money such as annuities which could include interest rates, opportunity costs, future and present values of money, and compounding. According to Brealey, Myers & Marcus, 2004, “each time value of money has five variables: interest rate or return, time or number of periods, future value, present value, and amount of payments either made or received” (pg. 812). The two key components of time value of money are present value (PV) and future value (FV). Present...

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...Time value of money is the concept that shows the value of money which decreases day by day. There are so many factors which contribute to the time value of money such as inflation and increasing interest rates. The time value of money is sued to solve the problems which are related to the loans, mortgage, leases, saving and annuities. In the investment, time value of money is used to compare the alternatives of investment (Weil, 1990). The time value of money is based on the concept that money that anyone has today is worth more than the expectation which one will receive in the future. The money which is hold in the present is worth more because it can be invested and can earn the interest. For example, one can invest the dollar for one year at a 6% annual interest rate and accrue &1.06 at the end of the year. Then it can be said that the future value of the dollar is $1.06 given an interest rate and the present value of the $1.06 it is expected to receive in one year is only $1 (Drake, & Fabozzi, 2009). Interest rates and series of payments are included in the transactions. If the time value money is not used in past then there may be risk in the transaction. This helps in reaching at the comparable value of the money. that anyone has today is worth more than the expectation which one will receive in the future. The money which is hold in the present is worth more because it can be invested and can earn the interest. For example, one can invest the dollar for...

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...Time Value of Money: Name: Professor’s Name: Institution: Course Title: Date: Introduction Time Value of Money is the concept that a certain amount of money has a different value today than it would in the future. It is explained as the idea that money at hand at the present time is worth much more than the equal amount would in future (Crosson, 2008). If you lend your friend money today, most likely he will refund the same amount you lend him in future. That money will have added no value to itself. Lending it to your friend is not an investment. The sooner you get the money back, the better because you can invest it elsewhere. Therefore, if one was not to use a given amount of money today, with intentions of using it in the future, he should put that money in a saving account. That way, the money will accrue interest and it will not be of the same amount as initially saved. The amount of interest accrued on saved money depends on three things: the initial amount saved, the bank interest rate and the span of time the money will be saved. Inflation is another factor to be considered when calculating the interest to be accrued. If the inflation is high, the interest reduces since the ‘value’ of money reduces (Carr, 2006). This paper will discuss this concept of time value of money with the help of a question problem. Assuming I am 30 years old plans and I plan to accumulate $1 million by my retirement date, which is 30 years from now...

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