Billionaire Anil Agarwal sees himself as a “designer” for a strategy to drive the Vedanta group into a management-run energy and metals global major that can survive and thrive for the next 500 years.
“The company will grow and can definitely make $50 billion revenue,” said the Vedanta Resources Chairman.
He believes that India is in a sweet spot, with abundant natural resources, a thriving start-up culture, capital availability, and the government is moving in the right direction. It only needs to move faster.
Also read: Key highlights of the interview with Vedanta Resources Chairman Anil Agarwal
Agarwal cautions it is high time India her prioritised energy security and opened up the space to the private sector to boost production.
He suggests corporatisation of public sector entities, and talks about the disinvestment plans for BPCL.
In a free-wheeling interview with Moneycontrol’s Rachita Prasad, Agarwal opened up about his journey so far, how Vedanta has fought many challenges, and his personal and professional plans.
Edited excerpts:
Q: You are no longer talking only about issues like land acquisition, mining being stopped in certain locations and other challenges faced by the business. You have become very active on social media, of late, sharing stories of your personal journey. What has prompted this?
A: I am doing this to inspire people, mainly youngsters. There's no country in the world, like India. India is a sweet spot. Today, people are looking for an alternative to China. People don't like China as much, and they definitely prefer India. So I want to inspire people to use this opportunity. Earlier, there was a club, and you couldn’t enter into this business. But now, in this digital age, it’s all up to you. You can go wherever you want. There is so much happening in social media, startups, and FinTech.
India is the largest place for startups and youngsters. There was a time when women could not move to Bengaluru or Pune to learn and work in software and technology firms. But now, with technology, they can get trained, get skilled and work anywhere. They can create software and they can get jobs online. It’s not only India they can supply to, they can supply to any country. So my stories are to inspire people and to tell them that please don't get disheartened with failure. Failure is a ladder for your success.
Q: You spoke about the barriers which have gone down in terms of doing business. But do you think startups still face barriers in entering and working in the core sector, which is still dominated by bigger conglomerates?
A: Startups are looking at the core sector. With technology, they are looking at ways to improve production, and a lot of new things are coming up -- for instance in logistics. An Indian’s brain can take pressure and multi-task; it is good at jugaad. Our businesses will continue to do well, but my wish is that my stories inspire others, too. There is only one thing to know- Agar himmate mardaan, madade khuda. (If you have courage, God will help you.)
Q: You have been saying for the longest time that India is a sweet spot. You are very optimistic about natural resources in India. But there are still challenges related to land acquisition and environmental issues on the ground. What more can be done to push things on the ground?
A: The one good thing that has happened is that we don’t have scams anymore. Number two, by and large, citizens are safe, women are safe. Toilets are being built. A lot of small things are happening but we need big capital to come in for local production, and we don’t just import. The biggest thing to have happened is that now we don’t have to chase state governments. They are competing with each other to chase us and get investments because they understand they need development.
If we make a small announcement to set up an aluminium factory, we get calls from 7-8 chief ministers. Things are changing slowly. The digital technology and transparency will help all businesses, even agriculture.
Another issue is that there is a lot of foreign interference. They think they can use the judicial process, with help from NGOs, to create disturbance, so that industry will not come up. People don't want India to produce, people want India to be a market.
Q: Do you think there is a concerted effort towards this? Who is doing it?
A: Generally, there is a lot of competition. In electronics, Korean, Chinese, and other producers want to push their products and don’t want India to have mass production. In oil and gas, there is Middle East and other producers.
Q: Is it not about internal factors as well? What do you think about the impact of government policies and capital availability on the pace of investment and production?
A: There is no shortage of capital. In general, governments walk at the speed of an ant. They need to accelerate the speed and prioritise. We are moving on that front. The only thing that is required is that if we are running at 60 km (per hour), we must run at 90 km.
Q: What is your outlook on global commodity prices, especially given the demand-supply situation and geopolitical situation? Is there more upside left?
A: I see more upside. But for India, it is high time and this is an alarming situation. Our energy security has to become a priority. There should be no discrimination between government companies and private companies, and in importing from a foreign company and buying from local companies. We are at an alarming stage where we realise we need to increase local production. Government companies, put together, have a market cap of $200 billion today. Why can’t they corporatise? Why can’t the government sell the shares to Indian mutual funds, private equity funds and HNIs (high net worth individuals)? They are very strong and board-driven companies. The government has to be completely out of that business. We can give equity to employees, and nobody would be retrenched. If we do this, the $200 billion market cap can go up to $600 billion.
Privatisation process takes too long, corporatisation would work faster. The government should just sell shares in the share market and reduce their holding to zero.
Q: You are among the few suitors for BPCL privatisation. What is happening on that front? What is the status and when do you expect it to happen?
A: It will not happen. They've said that they have withdrawn the offer, they will come back with a new strategy.
Q: Has the government officially communicated that the proposal is withdrawn?
A: They have given a general statement that they're not going ahead in this format.
Q: Would you be interested if they change the privatisation plan for BPCL?
A: No point discussing it right now. When they come to the market, we will see.
Q: The recent geopolitical crisis has highlighted the need for increasing domestic crude oil production. How can India expedite that to ensure energy security?
A: The government should give blocks to private players for 50 years or till the mine life. Going to the government for renewal every 5 or 10 years will not attract foreigners. We need to stop calling these companies contractors, and see them as owners as they go to deserts and put their money and effort. Let them own it because you get the maximum revenue. We have the highest levies in India. This needs to be reduced.
Our prime minister has also said that we are not revenue-minded, we are production-minded. We need to make changes so that we don't have to go to the government. Forest clearance is the biggest problem in India. We can make environmental norms which allow self-certification possible.
If we really want energy security in this country, we need at least 20-30 companies to come in. I have always said Barmer can be another Houston, there is so much potential. India has enough resources available. It only needs simple policies, which our Prime Minister also wants. Let people make money; making money should not be a sin.
Q: We are facing a coal crisis yet again. What can be done to increase production?
A: We have the largest coal deposit. We should open a large number of mines as quickly as possible. Not just small mines, but large mines, which Coal India is not developing. By the time we come out with alternative fuel, it may take 10 years. So let’s open up coal.
Every country is producing coal but they are pushing only India to not open up. Can you believe India has only one coal company? Exploration is lowest in the world in India. We should have hundreds and thousands of people doing explorations, they will find enough funding. If they discover oil, gas or coal, they should be allowed to sell their rights.
The government does not allow it right now. I want startups to own one drilling machine, and, with technology, work on exploration. Don’t give licences only to big people. Allow startups to trade it, because they may not find the money to develop it into a big mine. They can explore, discover, trade the block and start on new projects. India ki tijori ke andar paisa pada hai,usko kholo na. (India has resources, it needs to be opened up.)
Q: Vedanta recently scrapped a restructuring plan. What is the plan for the company, going ahead?
A: We are producing everything under Vedanta Ltd – oil and gas, metals. It is an all-in-one company. This company will have at least $30 billion in revenue at least this year (FY23), and $10 billion profit. Our total debt is about $12.5 billion, out of which $9 billion is at the parent company. We have enough dividend to service the debt.
Q: You have said that Vedanta would reduce debt by $4 billion in the next three years. How do you plan to do that, considering the tightening in capital markets?
A: We’ll be able to reduce $4 billion debt in three years at the parent company. This will be from the dividends we get. At the India level, our debt is around $2.5 billion.
Q: What is your capex plan?
A: We have $10 billion profit coming in every year. That is more than enough for our expansion plan. We are expanding oil and gas, zinc, and aluminum businesses. We get a tax rebate, and we have two years to pay back. So, we would like to put in that money into our business.
Q: What about mergers and acquisitions?
A: We do not have anything at the moment.
Q: You spoke about setting up an investment platform for investment in public sector companies. How is that working out?
A: There are no PSUs on the block currently. We would not put our money. Because people have a lot of comfort with us, investors will put in the money. We take 20 percent as management fee and run the company.
Q: Analysts expect that you may miss the FY24 target for oil production. What is the oil and gas expansion plan?
A: We're looking at 300,000 barrels in two years’ time and 500,000 barrels in three years. We set 200,000 barrels for FY24. We have reached only 174,000 barrels because certain clearances are not there. We are going from $20 billion to $30 billion in terms of revenue. So, we are increasing our production of zinc and aluminium.
Q: You have undertaken some green initiatives and have set a net zero target. How are you working towards that?
A: We will convert 25 percent of our power consumption of 9,000 MW to renewable energy. This can be a separate business because a lot of people want to partner with us. They'll be more comfortable because they will have a power purchase agreement with us.
Q: You are facing challenges in projects in Niyamgiri and Thoothukudi. What is the group’s strategy for dealing with these challenges?
A: We have 20 businesses. If one or two businesses sometimes don't work well, we have to live with that. But we are transparent. The matter (Thoothukudi) has gone to the court. Judiciary has to move faster. Today, India is in a fast lane, so the judiciary needs to move faster.
Out of 20 plants, the ones in Goa and Tuticorin (Thoothukudi) are not working. Together, they form about 6-7 percent of our whole business.
Q: You have been keen on starting mining operations in Goa, and the state government has also indicated it wants to resume operations. What is the status?
A: Two elections have taken place. On both occasions, they said we are going to start mining. The state government, the central government, and even the Prime Minister has said. So we are waiting.
Q: What is your personal ambition now?
A: For me, it’s very important to look at the bigger picture: how I can reduce India’s imports. I want to create more competition, I want 10 more companies as competition but I definitely want to grow my company. India is the only country in the world where you can produce and sell in India. Most other countries, like Australia, produce to export.
Vedanta is running like an institution. I am building it for the next 500 years. It should be a champion company from India. This company is not going to be run by my family, it will be run by the people, for the people, for the country. But it is going to be one of the best companies possible -- with technology, with people. We have 100,000 people, we hardly have any union. So something is working, no?
Q: You have said that Vedanta will not be run by your family. Then what is the succession plan?
A: This company is an institution and my children are very competitive and competent. They should create another Vedanta. Vedanta is run by the management. Each company has the best CEO. They are driving the company very well individually and the central position is very good. We have shareholders and I am there as a figurehead, a designer. I design and develop the fundamental strategy.
Q: Are you grooming another Anil Agarwal to take over the group later?
A: The shareholding and the management will be different. They can’t be mixed. We are entrepreneurs, we have established a company. I am doing my job, moving ahead, and the management does the day-to-day job. We have the best management, we have always got the best international leaders.
Ownership and management should be separate. I will keep withdrawing, keeping the management on the top. Slowly, the CEOs will get more empowered and run the company and make shareholders happy. We will see what happens, the company will grow and can definitely make $50 billion revenue.
Q: Professionally, your next ambition is to have more competition in India. Personally, what is driving you?
A: I am definitely looking to have a mission for women and children. ‘Nand Ghar’ project is my mission. Of my wealth, 75 percent will go for charitable purposes. I am looking forward to building the largest charitable fund for women and children in India and some parts of Africa. I want to empower women and make every child ready for the future.
I want to make sure they are not malnutritioned and they have access to digital education. These children should have sanskar. Ham jhoot nahi bolte hai, hamare mei darr nahi hai (We don’t lie, so we are fearless.)
Q: Any plan of coming to public service more actively…
A: Abhi kar hi rahe hai kuch. Janta bhi nahi hu, kuch samjta bhi nahi hu lekin agey badhte jate hain, dekhte kya hota hai. Dheere apne liye toh kuch raha hi nahi. (I am already doing some public service on my own. I don't know how these things work but I am going ahead slowly.) I tell my industrialist-friends– Yeh jo wealth hai, you are a trustee of that wealth, never think you own it.
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