‘These are initial hiccups... I am sure we will sail through difficult times’
Amid the ongoing controversies surrounding the Vedanta Group, the London-based NRI billionaire Anil Agarwal is presently in India on a four-day visit.business Updated: Oct 11, 2010 22:22 IST
Amid the ongoing controversies surrounding the Vedanta Group, the London-based NRI billionaire Anil Agarwal is presently in India on a four-day visit. He spoke to Hindustan Times on a wide range of issues, from his recent multi-billion dollar deal to acquire a majority stake in Cairn Energy Plc and the tribals of Niyamgiri. Excerpts:
Ever since the Cairn-Vedanta deal was announced in August, there has been negative sentiment surrounding your group’s business in India. Why?
I think it is more coincidental than any particular development leading to it. We are an India-centric company and are doing most of our businesses successfully. As far as our Niyamgiri Hills bauxite mining project goes, Rahul Gandhi has himself said that he is not against the development but the issue was that of the tribals. I fully agree with him that we have to protect our tribals but if there is a complaint they should first verify it properly.
It is a misconception that we are doing mining there... not a blade of grass has moved. These are initial hiccups and I am sure we will sail through such difficult times. Presently, we are buying bauxite and in times to come, the government will give us bauxite and we are prepared to wait.
What about the Cairn deal?
We were to inform the government but the information leaked in the media and we had to close the deal within 24 hours and inform the stock exchange. So we had no option. It was unfortunate but then I have met the higher ups in the government, trying to explain the circumstances under which this happened. I am sure the deal will also go through and after the government completes the scrutiny, it will be a win-win situation for all stakeholders including Cairn, Vedanta and ONGC.
Do you think you have paid a higher price for purchasing a majority stake in Cairn India?
Each asset we bought in the past has raised the same questions. In this case too, the price we paid was at a 20 per cent premium on the trading price of Cairn India. The London market does not allow a deal involving change of control to happen if there is premium less than 20-40 per cent. A good asset does not come cheap and this is a good asset. I think we have paid a right price.
After the spate of developments at Niyamgiri, where your company will not be allowed to do any mining, what is the road ahead for Vedanta? Have you discussed any alternate sites with the government?
Of course, the government is very serious and is looking at other resources that can be offered to us. But again, there is a process with clearances from the mines ministry and the environment ministry. So it will take few months till new options are offered to us.
You have been an iron ore producer and there has been talk of your entering the steel production. When are you actually entering the steel sector?
We are very excited about Sesa Goa’s future business. We are talking to some 50 steel companies to supply them with raw material. We are manufacturing million tones of pig iron. In future, if we go for a steel plant, we will come with a strong partner.
Sesa Goa’s open offer was to open today, but has been delayed due to lack of approval from SEBI. Are you looking at increasing the open offer price to minority shareholders of Cairn India?
Our current offer is very lucrative and there is no question of increasing the open offer price. (Vedanta Resources is buying 40-51 per cent stake from Cairn Energy Plc and its subsidiary Sesa Goa has filed the papers for an open offer for an additional 20 per cent stake.)
Why are approvals from SEBI on your open offer taking so long?
SEBI has been seeking some normal clarifications on the deal with Cairn Energy Plc and Vedanta is replying to them. We expect the approvals soon.
What are your investment plans and vision for Cairn India?
I have met Cairn India’s executives and they have ambitious plans. They have lot of onshore potential (Rajasthan oil fields the largest onshore oil fields in India). They have not invested much in offshore and we want to concentrate there now. The investments would be up to $6 billion.