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Stepping on minefields

Many avatars - Mineral magnate, healer of PSUs, cyclist. Anil Agarwal’s reputation as a tribal landgrabber has eclipsed all else.

business Updated: Aug 21, 2010 22:18 IST
Sumant Banerji

Vedanta Chairman Anil Agarwal is known as a man of few words and more action. He has been relentless in the expansion of his various group companies that mostly deal in copper, zinc, aluminium and iron ore with operations in India, Autralia and Zambia.

His modus operandi is simple – acquire a down in the dump or relatively under-leveraged company, expand capacities manifold and ensure steady raw material linkages.

Agarwal first came into the limelight when he went abroad to London to list his company in 2003. That was the first time an Indian firm went on the scrolls of the London Stock Exchange.

Four years later in 2007, his Sterlite Industries was the largest IPO by an Indian firm in the New York Stock Exchange. Around the same time, he pulled a coup beating stalwarts such as ArcelorMittal and Birla Group to acquire India’s largest private sector iron ore miner Sesa Goa.

Steadily but quietly, Vedanta Group now represents the third largest business conglomerate in India (in terms of market capitalisation) ahead of its more famous contemporaries like Birlas, Ruias, Mahindras and Goenkas.

But despite his various achievements he is not seen as a Tata, Ambani, Mahindra or Munjal. The reason? Ethical issues have dogged Agarwal for years.

His Niyamgiri project in Orissa, for example, has invited a lot of bad press, not to mention a weakened investor confidence. A number of high-profile investors in Britain including the Church of England have attacked Agarwal on his allegedly cavalier attitude towards the displaced populace and sold their shares as a mark of protest.

Agarwal has had a fair share of run-ins with investors in India as well. There are 189 cases pending before various courts in India filed by the shareholders of Sterlite Industries. The controversies however, come in the wake of Agarwal’s meteoric rise that saw him turn around two loss-making public sector units – Balco and Hindustan Zinc — a feat that, at least, for a while, that made him a corporate posterboy.

His journey started back in 1976 when he landed in Bombay to start his business as a metal scrap dealer. Coming from a family which made aluminium conductors, he was not new to the metal space but those were not the days when any metal barring gold used to shine.

In Bombay, his first move was to take over a firm owned by the King of Nepal that was into cable making. As in Australia, here as well Agarwal spotted what others, including his reluctant sponsor Syndicate Bank, would never have.

The company, Shamsher Sterling Corporation, had a huge chunk of copper lying unused at its Ghatkopar factory. Agarwal made a cool profit by selling that off and Syndicate got its money with interest back within a month.

It is during the turn of the century that Agarwal made his first bold move: take over the sick PSU Balco.

When the takeover happened in 2001, Balco had an annual turnover of Rs 92 crore with a loss of Rs 43 crore, produced 89,000 tonnes of aluminium and employed 6,000 people.

In 2009-10, the company produced 268,000 tonnes of aluminium, had revenues of Rs 2,746 crore and an operating profit of Rs 610 crore.

That was followed by another ailing PSU acquisition: Hindustan Zinc Ltd, and more recently Sesa Goa where Agarwal pipped the likes of ArcelorMittal and Birla Group.

The takeover of Cairn India is only in line with vision of becoming one of world’s leading natural resource companies on the lines of BHP Billiton.

“You cannot find another example of somebody who can dare take over a sick PSU and turn it around so fast,” said Amit Mitra, secretary general, Federation of Indian Chambers of Commerce and Industry (Ficci). “He remains hungry for more and importantly he did not turn them around by firing people or shutting down plants. Rather he doubled capacity ensuring that he would in turn need more people.”

Today, this boy for Bihar stays in upmarket London and has an office in the centre of the city. His working knowledge of English remains clunky even as he loves cycling in Hyde Park close to his home.

“When I was a kid, we used to read in Hindi that India ko sone ki chidia kehte hain (India is called the golden bird) and quite literally it is still very true,” he says. “I am hungry for natural resources and one day it just struck me that I have all other resources but oil. That is when I thought of venturing into it,” says Agarwal, explaining his latest foray into oil and gas.

“Wealth generation should not be for the individual but for the society at large,” said Agarwal, the philanthropist. “What-ever I have earned, 75 per cent will go back to the society.”

Agarwal is now foraying into the oil and gas space, a daunting task considering that he is a rookie in the sector.

But his bigger challenge is whether he can come out intact of the growing mess of his reputation as a landgrabber of tribals in mineral-rich India.

Vital stats

Who is Anil Agarwal?

The 56-year-old founder chairman of Vedanta Resources was born and brought up in Patna. He belongs to a family involved in the business of aluminium conductors. He dropped out of school at the age of 15 after completing matriculation. Former Bihar CM Lalu Prasad Yadav is his fellow alumnus. Agarwal now stays in London with his wife and two children. Son Agnivesh, 30, is chairman of Hindustan Zinc. Daughter, Priya, 26, is involved in Vedanta’s creative projects

What is Vedanta?

A conglomerate of $ 70 billion with revenues in excess of $ 7.9 billion and market capitalisation of about $ 12 billion. The first Indian group to be listed in the London Stock Exchange in 2003. Its group company Sterlite Industries was listed in the New York Stock Exchange in 2007, the largest IPO by an Indian firm in the US. The group aims to produce 10-12 % of the world’s metals.

The business

Zinc: Hindustan Zinc is the world’s largest integrated producer of zinc and lead. Recently acquired Anglo American Zinc assets.

Aluminium: Capacity of more than 2.5 million tonnes per annum.

Copper: Aims to be the second largest copper producer with 1.3 million tonnes.

Silver: Capacity to grow to 550 tonnes per annum and join the world’s top ten silver producers.

Iron Ore: Largest private sector exporter. Aim: to produce 50 million tonnes of iron ore.

Commercial Energy: Current projects will increase capacity to 5,500 MW, besides about 3500-MW captive generation.