Vedanta plans capex of $10 bn in next 3 years, aims to pare debt

Having ventures in various natural resources and commodities Vedanta plans to further expand its reach in the oil and gas segment in the coming year, says Anil Agarwal, Chairman Emeritus, Vedanta.

In an interview with CNBC-TV18 he said that the company is looking to invest around USD 10 billion in the next 3 years -- USD 3 billion in oil and gas, USD 1.5 billion in the aluminium and iron ore segment, USD 1 billion in the copper segment -- and looks to foray into glass making which is used in TV and computers.

The company further aims to cut its debt by around USD 1.5-2 billion in the next one year.Below is the verbatim transcript of Anil Agarwal’s interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Investors are now eager to know where your next leg of growth will come from. A: All sectors are very priority but oil and gas is one which we are going to invest the most. Sonia: We are also interested to know what the capex plan is over the next couple of years but for the next fiscal itself, what kind of capacity expansions are we looking at? A: We are looking to invest about USD 10 billion in about three years time. In general I can talk about the USD 3 billion will go to oil and gas, USD 1-1.5 billion will go to aluminum, iron ore will take another USD 1.5-2 billion, copper will take close to USD 1 billion. So, these are sectors all together we are looking. Also, I am very excited about, we have a hi-tech company, Sterlite Technology and we are looking to invest separately USD 10 billion to develop the glass. This is something which will change India. When I was in Japan with the Prime Minister in the recent visit, it was amazing how the Japanese company has come around and they said if you develop the glass making, we will create a Japanese hub to get at least 15-20 ancillaries to develop all the electronic, TV, cell and the computer industry around. So, it is very exciting. Latha: Aluminum business has been growing but what about captive bauxite mine allocations? Have you got any, have you any plans? A: India has one of the largest bauxite reserves and one of the best quality. China does not have that quality of bauxite. They produce 35 million tonne of aluminum; against that we produce only 3 million tonne. So, government and we are working very much together and I am looking forward within six months time, some mine will be allocated to us. In the meantime, some of our captive mines in Chhattisgarh and we are developing our bauxite from there. I am completely assured and I am completely confident that we will get the bauxite mine in coming years. Sonia: Are you looking at any point to enter into the steel business? A: We are in the business of iron ore and India has a tremendous positioning in iron ore. India can produce up to 600 million tonne against what we are producing 100 million tonne. Australia economy run on the basis of iron ore, so we are very focused on iron ore, but we are looking to maybe set up a small plant for making some special steel. Nothing is on, which I can tell you at the moment, but definitely we will be looking at to set up a special steel producing company some point of time. Latha: What is the target for the domestic iron ore capacity now? A: Our vision is to produce 50 million tonne and we have some mine lease which we are developing. Also government is coming out whole heartedly for the auctioning of this iron ore mine and we will be participating. Our plan is to produce about 50 million tonne of iron ore. Sonia: Let us also talk about very lucrative zinc business then, any kind of special dividend or buyback that you plan with the kind of healthy cash balance that you are sitting on? A: Every of our business is a juicy business. Take the oil and gas, take the iron ore, take the aluminium, take the zinc, copper, so each business you are looking today but on the background each of business is a phenomenally growth and will do as good as a zinc. As far as the zinc is concerned we have some reserve and we are looking, contemplating how partly buyback or partly can we give some dividend. However, something we will take a decision in few months time. Latha: Do you have any deleveraging plans at the parent level at the Vedanta PLC? A: This is a reasonable debt if you look at our equity and debt ratio, but we have a good dividend pipeline. Also we have to service the debt and the interest payment. Also we have a Konkola Copper Mines (KCM) which is one of the largest copper mine and we are looking to make it more efficient, it will be good profit making company and we are working on it. With that this debt will be comfortable. We are looking to reduce that debt for under USD 1.5-2 million in this year time. Sonia: Can you give us any kind of timeline on the Cairn India merge, are we looking at March of 2017 maybe? A: The process is gone through; now the government is making it much easier because earlier the merger was through the court, now very simple process is going on. I am looking forward this financial year to complete the merger.