China hurting Indian metal cos; bullish wind power: Vedanta

So, overall, I am looking, we have an import of USD 600 billion and my focus is if I can be of any use, by which natural resource can be developed, I am ambassador for oil and gas what we have done. I am ambassador the Hindustan Zinc (HZL), I am ambassador for the Bharat Aluminium Company (BALCO) and I have shown that how the employment can be generated.

I will give you small example, like even if you take the aluminium. To produce aluminium, aluminium is a green metal. 50 percent of aluminium will replace steel and 10 percent of the population of China, one way or the other, is connected with the aluminium. We produce aluminium. Even if you look at the car, they take 500 kg of aluminium with its radiator and other parts. So, India need, our Prime Minister says Make in India with small and medium enterprises (SME). All SMEs and once you start finding in India like aluminium and then you process it, thousands of new industries will come. Everything whether it is construction, electrical, so same thing with the copper, same thing with iron ore. Iron ore, we produce 100 million tonne. It has the potential to produce 600 million tonne.

For three-and-a-half years iron ore was shut down and today there is export duty on iron ore. We used to sell iron ore at USD 110. Today, we are selling USD 30-35. There is export duty. So, government has been doing it, but we need, today 50 percent of the aluminium of our consumption being imported. Can you believe this? We never used to have import of aluminium, today 50 percent of aluminium being pushed by China and they are getting subsidy in their country to sell this material in India. So, we are looking forward from Indian government to support at this point of time.

Q: Since you talked about HZL and BALCO, let me ask you if there has been any conversation on the residual stake sale with the government? I know that the last time you made the offer to the government was in, if my memory serves me right, October, 2013 and you made a provision, you had got board approval as and when that transaction would have taken place. Has there been any update at all? Are you disappointed with the fact that you continue to not be able to exercise what you think is your right?

A: Yes, this is something which all international people, whenever they have gone, they have talked about retrospective tax, they talked about this Hindustan Zinc, BALCO and they have all the intention. However, if you ask me one word about what India government needs to do, is to cut the process time. They cut the process time; take the decision faster in the most transparent manner. That is what is required. Hindustan Zinc is a very clear example what we created value for them. We are not saying give it to us. Whatever is the manner, divest it and that is what we are looking.

Q: Speaking of future areas of opportunity. This government is very keenly focusing on renewable energy. Could that be a potential area of opportunities as far as you are concerned?

A: Sure, we are already producing wind power, 500-600 megawatt in our Hindustan Zinc and we are absolutely reviewing every possibilities, every opportunity and we will be with the government for this opportunity for renewable energy.

Q: Before I close, I know you are out of time, but my final question. Shareholders are watching this programme today, what is the message that you would like to send out about the health of the balance sheet, about your future and about the proposed merger?

A: This is an amazing company, this is a balancing company, we pay the largest taxes, royalty in India, we have always paid the dividend for our company and we have always made our commitment fulfilled. This is the future company which creates tremendous job opportunity and I can only say that I will never disappoint my shareholder.Q: Are you still committed to invest in Rajasthan and India after the government of Rajasthan has said Vedanta's terms of engagement needs to be renegotiated?A: India energy security, we only produce 10 percent of our oil and if you see what report I am seeing that 60 percent growth in oil and gas consumption is going to be in India and China. You can imagine that there is no new production is coming in. India will be probably 5 percent producing. It is very alarming because even China because they don’t have enough hydrocarbon patch, they produce 50 percent of their energy. It is a broader prospect. These were the marginal field Rajasthan and we have taken this challenge where it is Hindustan Zinc, whether it is aluminum, whether it is the oil, we have taken this challenge.We get the best of technology, best of people and we double the production. There was no chance of producing gas, we invested almost Rs 13,000 crore to develop this gas. My vision is to produce 50 percent oil production of India. My vision is to create this gas and I have a feeling that we will produce gas. I am looking at least five to six cities to have a city connection in gas.I am talking to Rajasthan government and this negotiation re-negotiation is very small thing. These were the marginal field. Today if you see the royalty, the taxes which we are paying are the highest in the world.Q: But they want more?A: This is something goes on but I am looking a broader prospect.Q: Are you resigned to the fact that you are going to have to pay more?A: It is not the question of paying more or less. They have to look at a broader prospect. It is a clear cut terms and they have to encourage more and more people to come. We cannot live on this negotiation part. This small thing will pinch India very badly.Q: You are saying that it is a small thing that will pinch India but have the negotiations been finalised are we likely to see this arrangement being re-worked and how soon?A: Only thing is what we are looking at our license expires at 2020 and we have four-five years to go. The kind of work we are doing, the kind of royalty we are paying which is the highest government wants to encourage us. Government wants 10 more companies like Cairn to come and we are the ambassador. If few are comfortable other companies will come. I have no doubt. My only thing is we would like to invest USD 10 billion and we make a creative model about the Cairn. It is a model, it is a model that how we run our business and on this model other companies will come and government will go with that prospective. Government has to go with this prospect and I have no doubt that they will not have that prospective, only thing is sooner is better so we can plan.If we don’t invest for four to five years, I am Indian though I have invested from, I am NRI, I bought FDI USD 30 billion in this country and I can bring another USD 100 billion if the opportunity comes because people believe on my structure. Last 10 years I have raised the money, I have paid all the money on time, I have given the dividend, my share price has done well so people are comfortable.However, oil and gas, I am very keen that 10 more companies to come and for 10 more companies to come they have to make this policy very simple, they have to make adjusting company, there are so many cases to other companies, just renegotiate, across the table, finish it. So, only target is production should not hamper.Q: We will have to wait and see whether the government actually pursues what you are saying in terms of being able to simplify the contracts as far as the oil and gas sector is concerned, always been mired in controversy. Let me ask you since you were talking about share prices and you were talking about shareholders, let me ask you about the proposed merger. You are well aware of the opposition that has come in from minority shareholders, you are well aware of the opposition that has come in from LIC for instance, a large shareholder.A: There is no LIC opposition, there has never been and I have never heard an LIC person. They are very matured people, they are very responsible people. They are trying to create a natural resource company which is very important for country like India.