Forbes India — November 17, 2017

Agarwal swooped in. He bought a 51
percent stake in Bharat Aluminium
Company (Balco) on the cheap in
2001 and orchestrated a turnaround.
So also with Hindustan Zinc.
At the time wholly owned by the
government, the company was in the
red and its zinc-lead mines spread
across Rajasthan were believed to
have reserves to last for only five years.
But Agarwal spotted an opportunity.
“He is a man of instinct. He goes
by his gut,” says HDFC Chairman
Deepak Parekh, who serves as an
independent non-executive director
on the board of Vedanta Resources.
Agarwal acquired a 65 percent
stake from the government in 2002
and infused fresh funds, expertise
and technology into the ailing
entity. This helped lower costs and
boost productivity, making the once
uneconomical company essential:
Today Hindustan Zinc meets more
than 80 percent of India’s demand
for zinc. It is the second largest zinc
producer in the world after Anglo-
Swiss mining giant Glencore and
its cost of production is among the
lowest in the world. It has reserves
to last another 25 years and is also
Vedanta’s most profitable unit. “If
I find things are in range, I never
take time to shoot,” says Agarwal
of his acquisition-led strategy.
But it’s not just undervalued
assets that he zeroes in on. Vedanta’s
purchase of a majority stake in

Cairn India, subsidiary of British

oil company Cairn Energy, for

more than $8 billion in 2011 was an

expensive one, says Agarwal. But it

was important as it marked Vedanta’s

entry into the oil and gas market.

Plus, with the merger of the cash-

rich energy business into Vedanta

Limited (formerly Sesa Sterlite)—the

debt-ridden Mumbai listed entity

that is 51 percent owned by Vedanta

Resources—earlier this year, Agarwal

not only streamlined the group’s

debt but also came closer to his

“dream” of creating an integrated

resource major out of India. “BHP is

from Australia, Rio Tinto from the

United Kingdom, Vale from Brazil.

India, too, must have its own natural

resources company,” he says.

In fact, some say Agarwal’s

purchase of a 12.4 percent stake in

Anglo American for $2.4 billion,

through his family trust Volcan

Investments in March this year, and

his upping it to 20 percent for another

$1.5 billion in September, is also aimed

at furthering that pursuit. Agarwal

insists that it’s a personal investment

but given the Johannesburg- and

London-based miner’s assets,

including its ownership of De Beers,

the world’s biggest diamond producer,

it seems unlikely that he will

remain a passive investor. Besides,

in the months since Agarwal’s first

investment, Anglo American, which

was among the hardest hit miners in

the commodity price slump of 2015

and 2016, reported healthy results and

even beat its debt reduction target.

B

ack in Agarwal’s seafront villa,

he launches into a spirited

monologue about India’s

potential. The country’s geology, he

says, is similar to that of mineral-

rich North America, Latin America,

Australia and South Africa. Yet we

produce only 20 percent of our

natural resource requirements.

More than a third of India’s

import bill—now at around $500

billion—is spent on petroleum

products. This is around 10 percent

of the GDP. Oil and gas aside, India

also purchases large quantities of

gold, silver, coal and fertilisers from

abroad. “Instead of extracting and

utilising our natural resources, we

are spending billions of dollars to

import them. We are eroding our

national income,” says Agarwal.

His purchase of Cairn India,

he points out, was with the view

of making India self-reliant. The

energy business currently meets

26 percent of India’s crude oil

requirement, which Agarwal aims to

increase to 50 percent over time. A

country that doesn’t produce 50-60

percent of its energy requirements

cannot survive, he contends.

In fact, Vedanta meets more

than 80 percent of India’s zinc

requirements, 95 percent of silver,

Vedanta Group structure

Vedanta ResouRces Plc

Vedanta limited

Zinc india BhaRat aluminium

(BALCO)

WesteRn clusteR

(LiBeriA)

Zinc

inteRnational

talWandi saBo

PoWeR

malco

PoWeR

a ustRalia

coPPeR mines

Kon Kola coPPeR mines 50.1%

64.9% 51% 100% 100% 100% 100% 100%

79.4% soResa eiRon

aluminium (Odisha aluminium

and pOwer assets)

caiRn india

(Oil and gas)

steRlite coPPeR

(tuticOrin)

PoWeR (600 mw

Jharsuguda)

subsidiaries Of Vedanta limited

listed entities unlisted entities note: shareholding post cairn merger Source: Company data

V olcan inVestments

69.4%

sAM

ee

R^ pA

wAR

december 29, 2017 forbes india | 53