We will invest $20 billion in India in the next 3-4 years: Anil Agrawal, Chairman, Vedanta
Anil Agrawal, founder and Chairman, Vedanta Resources Plc., talks about India's plan to be a $5 trillion economy, investment plans, challenges, government's asset monetisation plans, global Energy crisis and more.
Anil Agrawal, founder and Chairman, Vedanta Resources Plc., talks about India's plan to be a $5 trillion economy, investment plans, challenges, government's asset monetisation plans, global Energy crisis, the surge in the price of commodities and metals, delisting and buyback plans among others during an exclusive interview at Expo 2020 Dubai with Swati Khandelwal, Zee Business. Edited Excerpts:
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Q: Are we ready to become a 5 trillion economy and how does your group sees this opportunity?
A: I feel, it will be a $10 trillion economy in the coming days as we are a country of 1.4 billion people, we have youth and we have a support of youth and such a youthful country is rarely seen. Even the UAE says that it has people below 30-35 years but the number is very small while we are huge and every fifth person in the world is an Indian. We have manufacturing and production of oil, gold, copper, coal and we have huge stocks of these and I call upon the world on behalf of the government to come here. Today, technology is so good that we can get things done well through technology. Our Prime Minister is paying a lot of attention to the environment and as we will work in a modern way and will work keeping the environment in mind. Our youths are qualified and will pay attention to it. On the other hand, if we will look towards technology and if technology has started across the world and is moving ahead then it is being by Indians.
Q: You have always committed to invest more in India. So, let us know about your plans in terms of where by when and the kind of investment that you will make in India?
A: For me, India comes first in my mind. In terms of business, I look towards the second line, for instance, the production of gas and oil where 85% of the oil is imported. A lot of oil reserves are available in our country and we have sweet crude as well as sulphur-free crude, which is environment-friendly and we want to produce 50% oil of India, i.e., 500 thousand barrel and the government is engaged in it with us. I would like to request the government to reduce duty a bit. Currently, 72% of duty is slapped in our country and if it is brought down to 40%, which is the norm of the world, the entire world will come to you. Interestingly, not just us but at least 10 more companies internationally should feel that our country is a preferred country then we will definitely move further in oil. Today, only 25-30% of the iron is galvanized in India and the world. But iron should be used only after galvanizing it and Zinc is a big medium for it and we are focusing a lot on it, We are the largest producer of Zinc in India as well as South Africa and we will make a huge investment in Zinc. Apart from this in Aluminium, India is a hub for Aluminium, our bauxite is so good and we have such a good consumption and in the coming days, there will be 32 applications for aluminium. Today, the consumption of aluminium is quite low. Currently, we are manufacturing 2.2 million tonnes of aluminium and will be manufacturing 3 million tonnes in the recent future at the lowest cost. I am quite hopeful that our work of aluminium will also grow. At the same time, we are also going to be the largest producer of silver in India and we will make a huge investment in it. On the electronic side, we manufacture optical fibre, we are a complete solution provider, we make software, system integration. And on top of it, our company manufactures Glass in Japan, Korea and Taiwan. There are four producers and the glass is used in TV, laptop, cell phones.
Q: Will an increase in its consumption will increase the business as well?
A: I have only one belief that whatever I make, it leads to the establishment of thousands of industries, start-ups, our youths are involved in it. employment is generated and our girls are quite qualified and should come forward. This is something where I focus on whatever I do. My biggest focus in whatever I do is that how new companies will be created from it.
Q: You have talked about technology, the new age area, and everyone is eyeing it and India wants to take a lead in it. You have your presence in it but do you think that it can be a very big growth driver for the group and the contribution of technology in your books is likely to increase further? What are the estimates and targets? Can you provide a lump sum figure on the investment that the group will make?
A: In the coming days, we will be investing $20 billion and of that 25% will go into technology and the remaining 75% into the real manufacturing we have.
Q: What is the timeline for this investment?
A: It can be 3-4 years. The entire world is standing with money, they want to provide equity and debt to us. There are fewer people to work. My wish is that if thousands of factories are created because of us and we can work in renewable energy and energy. As our Prime Minister has said that optical fibre cable should be used for education and entertainment. If the optical fibre is laid in every mandi (market) then live information will be available. And, I am quite excited about all these things and if I can do this and the God allows me, it will change our country.
Q: Amid the talks related to this big opportunity and investment, tell us about the challenges that are visible in India although the government is trying to ease out as much and open it for the world to come and invest?
A: Today, there is the only thing in the world, that is business. Every country and India has understood it. Some 2000 years ago, Chanakya had said that a country can prosper if it is economically advanced. It was said then, so this is the environment and the government has understood that the government has no business to be in business. We have done it above the ground in agriculture and we will make it happen below the group. Simple policy and self-certification should be there. Our Country is an entrepreneur's country and we should promote those entrepreneurs, provide self-certification to them, make that they roam minimum in the corridors and minimum approvals are needed as we want to showcase to the world that the way we want to maintain ESG, make norms for it. Forest clearance takes around 5-10 years today, which is not needed, all its norms are there and they have to be followed. Our forests have increased four times in the last 10-15 years. It is a nice country and good opportunity is available. Even today, 60% of the business is lying with the government.
Q: The government has unveiled a huge asset monetisation plan and PSUs are for sale. The government will stay in few strategic sectors and the rest will be given for privatisation. You understand it better. What are the areas of your interest and which are the companies you are looking forward to beyond BPCL?
A: Speaking from the heart, only 20% should be privatised and 80% of shares should be made public. Even today, if the government says that we will sell all the shares then it will get over a trillion dollars. No one should hold more than 5% of shares and not a single person is fired from those companies, no retrenchment. Trust me, our people will work, if good leadership is present. 80% of the companies across the world, like General Electric or someone else, are private but are run by the public. Interestingly, the CEOs of most of the companies are Indians and they are running the companies well. It goes against me but I think, apart from privatisation, it should also focus on corporatisation in which few companies are made private while others are corporatised. This will bring more prosperity to the country.
Q: What would you be interested in and which are the companies Vedanta group is eyeing?
A: I have understood how to do it as we have to take people along with us. We have shown our interest in BPCL and Hindustan Copper. Have a look at shipping, the shipping business stands around $100 billion here but Indian shipping companies are doing just 5% business in it. Shipping Corporation of India can grow 10 times from here. We should increase oil production in the country and make it prosper. I want to be engaged in it.
Q: Global Energy crisis is going on at present. What is your view on what is going on in China and concerns around it and how can it impact India?
A: I do not know much about the ongoing crisis of coal in China but their production has declined due to it. The amount of coal we have in India is nowhere else in the world and we have not explored it. The most important fact about which people are not aware is that we have Sulphur free coal, which is environmentally friendly. Going forward, the government has kept a target of 500 GigaWatt for renewable energy, which is the world's largest and when we see it from the perspective of our country, it excites us. With this, our country will progress a lot and it will leap to the forefront. China is a communist country and their point of view is different. We are the largest democracy and we cannot ignore anyone here. So, these are different positions of both countries.
Q: We have seen a huge spike in the commodity prices and it cooled off a bit before gaining pace again. The same was the case of metals where a sharp spike was seen and now it is cooling off. Going forward, what is your outlook on commodity prices and metal prices?
A: It is a supercycle and this supercycle will continue. I think about my country because we are importing around 70% and it will cost a lot to us. It still looks to be a supercycle and I don't think that the prices will go down a bit in metal and oil.
Q: Vedanta has shown its interest in delisting itself from the bourses but it didn't succeed in doing so. What are your plans for the future and will you again attempt to delist the company?
A: All the shareholders are connected with my heart and when I go to the AGM, I am surprised that 100 to 100 they want to stay connected with me. We are entrepreneurs and we do great works. We had a wish to unite the two companies and take them ahead as a single entity. However, it has supported us a lot, we were at 51% and have reached 66% and we are quite happy with it. The company will do well in the future as it is going to be an institution that will run for the next 500 years. The company is for the people and I firmly believe that the company will do well. I have always said that a family will not run this company. My kids are quite qualified and will do other big works and this company will emerge as an institution in the future. We have taken a model of Tata in which Jamsetji Tata did 66% in giving back and 75% of our shares will go in giving back. The company will turn into an institution and people will move ahead. You took the name of big companies but I am a small person from Bihar but I dream and this company will grow a lot in the coming days and will run well.
Q: What are your plans for delisting?
A: We do not have any plans related to delisting and I can guarantee you in this regard.
Q: Do you have any buyback plans?
A: Buyback is a general system, however, we do not have any such plan at present. Buyback helps in keeping the share prices strong. This will be decided at the board but today, there is no such proposal related to buyback
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