Q: Can you just talk about the dilution that will happen in Sterlite right now?

Agarwal:  We own about 73% in KCM which is the Kankola Copper Mine. The entire thing is coming as a part of Sterlite where a major re-structuring is taking place, this is the largest copper mine with the largest reserves. It will be producing copper at almost USD 1.10 which is a very low cost copper producer, this will come to Sterlite. At the same time, the aluminium asset is moving to Malco which is going to be renamed as Sterlite Aluminium. The Malco Share proportionately will be given to the Sterlite Industry share holders.

Q: What would be the outstanding share capital of Sterlite and Sterlite Aluminium post re-structuring because if it was a simple listed company then we could have computed it but now there is also a unlisted entity which comes into it. So, what is the quantum of shares that you will be giving for the KCM Merger?

Agarwal: We are bringing in the complete KCM asset in here; nothing is going outside the frame. The complete 100% has been divided between Sterlite and KCM asset but the major asset has moved to Sterlite. As far as the Sterlite share holder is concerned, he is getting a KCM asset and their aluminium asset is going to Malco and in that they are getting the share.

Q: Why is this restructuring done because the sense that one gets going forward that you have moved the better looking and capital intensive business, which is energy and aluminium into Sterlite Aluminium. You are left with a company, which has zinc and copper assets. If Asarco doesn’t go through any way Grupo Mexico gets it, then Sterlite may not be better off. What do you have to say about that?

Agarwal: We are going to invest Rs 1,15,000 crore (one lakh fifteen thousand crore) in our complete plant. When we used to go to investors they never used to like this cross holding. We grew in last four-five years; we got the zinc, aluminium, copper assets. Then we hired the best of the advisors, they have given us a proposal where by all the copper and zinc asset will come to Sterlite Industries. All the aluminium assets will go to Vedanta Aluminium and Sesa Goa will have iron ore. The entire thing was to invest Rs 1,15,000 crore, of which Rs 40,000 crore is already invested in the last three years. We have Rs 30,000 crore cash and we are going to spend Rs 75,000 crore in another three years time.

After doing that what is going to happen is we have made a provision for Asarco.  Asarco is going to come to our folds, which will cost us USD 2.6 billion. We are going to invest some money into zinc because zinc is going to grow. We are going to produce 600 tonnes of silver in three years time; silver is a great metal. In aluminium, we are going to produce 26 lakh tonnes of complete integrated metals and also 4,000 megawatts power. All this together will cost us Rs 1,15,000 crore.

As far as Sterlite is concerned, this will have tremendous growth because copper is the king in metals and has phenomenal future. We are making verticals for copper, zinc, silver and lead business, which is going to grow. We believe that Asarco is a done deal but we require two more months to complete the transaction. We will produce 1.25 million tonnes of copper, 1 million tonnes of zinc, 600 tonnes of silver and also about 200,000 tonnes of lead. So, it will generate tremendous EBITDA. 

Q: Can you give us a value of the assets, how much Sterlite has in its books post restructuring?

Agarwal: The value won’t be changing at all. I won’t be able to give you the exact number for whatever value is going away but in respect of that you are getting the share of Vedanta Aluminium.

Q: In whose books is Rs 30,000 crore cash right now, Sterlite’s or Vedanta’s books?

Agarwal: It has been done proportionately. The money required for Sterlite Industries for zinc and for Asarco is in the book of Sterlite. That’s how it has been given proportionately and the balance money which is required has moved to Vedanta Aluminium. It is probably a 50-50, about Rs 15,000 crore is with Sterlite and same amount with Vedanta.

Q: For Sterlite Aluminium to grow in terms of Capex, would you be coming and tapping the markets any time soon? We also have the Sterlite Energy IPO which has been shelved as of now, any plans to revive it once this restructuring goes through?

Agarwal: For a complete Rs 1, 15,000 crore, we have a plan whereby Rs 40,000 crore is invested. We have Rs 30,000 crore and we need Rs 75,000 crore in three year’s time. We believe that we will have internal accrual and generate about Rs 20,000 crore cash every year. So with that, we will be able to complete but if we require some debt, we might take some but we have no plan to come for equity in market.

Q: Are there any plans for an IPO for Sterlite Energy as of now?