Anil Agarwal, 62, group chairman Vedanta Plc, was in Mumbai recently to address business leaders at the metals-to-energy group. A school dropout from Bihar’s Patna, Mr. Agarwal created what is now a $13-billion global resource conglomerate with interests spanning oil exploration and copper and aluminium production. The London-based ‘Marwari’ billionaire elaborated on a range of concerns at his sea-facing bungalow in Mumbai. He spoke of investing more than Rs.1 lakh crore in India, even as his $35 billion investments so far are yet to yield full returns. Edited excerpts:
Is there a post-Brexit impact on Vedanta?
I think they (the U.K.) are making their own island. Britain’s P.M. May is a very strong lady. There might be some pressure in the short term but in the long term, independent U.K. will be very strong. They have a strong legal and trading community. It’s a very international place and people are comfortable doing business through the U.K. We (Vedanta) will have no impact from Brexit.
How did your family, and the Indian community, vote during the referendum?
I am an Indian passport holder but even my family with British passports couldn’t vote for some reasons. But, they were all for Brexit, for sure.
What’s the impact of falling commodity prices on Vedanta?
Commodity prices have bottomed out and are stable at the moment. I am very bullish on India’s natural resources. That is one area on which the government is also focussing. It has the potential to eradicate poverty and create jobs. We import 85 per cent of oil, all the copper, all the gold when we ourselves have all the resources, so it does not make sense. There is a study that says that India has better geology than China and we produce only 6 per cent of what China produces. We spent about $400 billion dollars on imports, draining out our hard-earned money.
Many industrialists suggest that the NDA government’s actions have been at the policy level but that results at the ground level are yet to be seen. Your take?
I believe that they have a mission and a vision. They are driving the economy and (I) believe that economic growth will take the country forward. For the first time, I have seen that the government has been understanding and taking initiatives for the exploration of natural resources. I can see the auctions of mines are happening. The Odisha government is keen that we get the bauxite resources.
What’s the update on the Cairn India tax dispute?
Tax dispute does not concern us directly as it has to do with the parent company of Cairn India, that is Cairn Energy Plc. The government is very keen to settle this. We are in international arbitration and it will be settled in a time-bound manner.
Is Vedanta hampered by the perception that it is not environment-friendly?
The Western world, for some reason, doesn’t want India to grow as they want to continue selling their goods and services here. The government has understood this and this basic fundamental will change the mindset. The perception is changing now as we have not picked a blade of the grass in Odisha. Vedanta is looking to explore natural resources in the most environment-friendly manner using the best of technologies and believe that the more development you do, the better it is for the country. In governance, we are among the top 5 companies ranked in the Disclosure Index 2016 report by FTI Consulting.
Is Vedanta deriving benefit out of the government’s policy decisions? Aren’t most of your projects still stuck?
We are now operating our Odisha plant at 40 per cent capacity and am optimistic that it will run at 80-90 per cent in the next 6-8 months. We have focussed enough above the ground, now it’s time to focus below the ground because mother earth has given us so much. If you look at the overall picture, we have the largest bauxite deposits in the world; the western world has explored 73 per cent while we have explored just 3.5 per cent. The government has that in mind and we are slowly moving forward.
What are your total investments in India and what returns are you seeing?
We have a total $35 billion in investments in India so far, out of which $10 billion has been in Odisha alone. We are getting returns in some of our investments, and maybe not in others. But these projects are for 100 years. If we don’t do it for India, who else will do it? I fully agree with you but we have taken a chance, put up a project and are working with the government. We are very hopeful that things will work out sooner than later. We contribute Rs.28,518 crore or $4.5 billion to the government in the form of taxes and royalties. About 95 per cent of our total taxes goes to the Indian government and if we open up the natural resources sector, it will further increase leading to huge revenue collection. In turn, the government can spend that in social and infrastructure projects.
Will you be cautious investing in India’s future given the uncertainty?
We have already invested $10 billion in the last three years and the results of these investments will fructify soon. Our Prime Minister wants us to continue our investments and we will do so. We are planning to invest Rs.30,000 crore in Cairn India and another Rs.15,000 crore in the iron ore, copper, zinc and aluminium businesses in the next two years. My vision is to produce 50 per cent or to contribute to half of India’s oil production. Cairn India currently produces 2,30,000 barrels per day (bpd) or 30 per cent of India’s crude production and we plan to increase it to 3,50,000 bpd or 50 per cent of India’s crude production with these investments in the coming years.
Following Cairn India’s merger with Vedanta, what’s the vision for the entity?
The effective date of the Cairn India merger is April 2016. We have got shareholders’ approval and court proceedings will be over in the next 2-3 months so it will be done before the next fiscal. Synergies of the merger will be seen in fiscal 2017. We will be the fourth-largest natural resources company in the world after BHP, Rio, Glencore and it’s a matter of pride for India. Now, 78 per cent of our revenue comes from India and the rest from Zambia, South Africa and Namibia. Post investments and the merger, the returns from India will increase further. The idea is to create the world’s best natural resources company, the world’s best energy company and I am driving it. If the opportunity arises, we are open to more acquisitions, which can be in oil and gas or anything else.
What are you doing for the Make in India and Digital India initiatives of the government?
We have a company called Sterlite Technologies. It is the third largest optical fibre manufacturer in the world. We are looking to participate in smart city projects. Sterlite is working on system integration to offer end-to-end solutions. It has a great future.
We are looking to make LCD glass panels for TV, mobiles etc. and planning to set up a semiconductor unit in Maharashtra. This is a $10 billion project, for which land has been identified near Nagpur.
How are global investors perceiving India?
I am an ambassador for India as I have taken foreign investors’ money and invested in India and have given them good returns. There is huge positive perception about India after the PM’s foreign visits. There is a lot of foreign money waiting to be invested in India. I keep talking to people about the India opportunity. I want global companies to come to India and invest and create more Vedantas.
Of late, you are devoting more time to philanthropy...
Our family has decided that 75 per cent of our wealth will go back to the society. We have 8 crore children and 2 crore women who need to become financially independent. We have started 4,000 Anganwadis and we call it ‘Nandghars’. In the morning we give food to the children, in the afternoon we impart skills to women to make them financially independent. We have created one of the largest universities in Puri, with an investment of Rs.20,000 crore. I am very keen on these two core projects. Now, we are investing Rs.600 crore and gradually, it’s going to increase. While most of my time is spent on business, I take time out for social initiatives a couple of days in a week.
Any succession planning on the cards?
This is an international company and is managed by professionals. I am in my 60s and driving it. I believe shareholders are different from professionals. My son works out of Dubai and my daughter just had a baby and works on the PR side.
