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Published in Business Today, Issue: April 2014
Billionaire industrialist Anil Agarwal has been facing a number of problems to expand his businesses in India. The government in January rejected environment approval to his Vedanta Group's proposed bauxite mining project in Odisha's Niyamgiri hills and has also been dragging its feet on allowing its Cairn India unit to expand its exploration activities. Still, Agarwal believes India has tremendous growth potential. In a conversation with Arunima Mishra at the India Today Conclave 2014, Agarwal says India must encourage mining and manufacturing to boost economic growth and hopes that the new government that will take charge after the General Election due in May will provide strong and decisive leadership. Edited excerpts:
Q. How does Vedanta plan to make the Lanjigarh aluminium plant in Odisha fully operational now that the government has rejected environment approval to bauxite mining in Niyamgiri hills?
A. It's a small thing [for Vedanta]? Not even a blade of grass has moved there as we have been talking about it for 10 years now... Aluminium is an important material for India. It's a material that can bring tremendous prosperity for India. If we produce aluminium it can provide employment to five crore people. We [Vedanta] have created a capacity of 30 lakh tonnes [but] we are running at 40 per cent capacity.
It [the Lanjigarh plant in Kalahandi district of Odisha] is a national asset and we expect our bauxite problems to be resolved... Late Biju Patnaik [former chief minister of Odisha] had one feeling in his heart that the stigma of Kalahandi can be eradicated only by setting up an industry there. We have set up that unit spending Rs 50,000 crore in Odisha. When I went there 10 years back, it was? worse than Andaman and Nicobar Islands. Today if you go, there's prosperity and the only industry there is our industry. It's a development model.
Q. So, what's your Plan B for the plant?
A. They [state-run Odisha Mining Corporation, a joint venture partner for bauxite mining] are doing whatever they can do. We are not interested in Niyamgiri. We need bauxite. We need our food.
Q. Do you think any corporate rivalry resulted in the no-mining status for Niyamgiri hills?
A. No. There has been no corporate rivalry... There's so much to be done in India [but] who has the courage to do it? We need more industry people to come forward and do it.
Q. There's speculation Cairn India would be merged with Sesa Sterlite. Is it true?
A. There's no [such] plan at the moment.
Q. Is there any update on the government's decision to sell its residual stake in Hindustan Zinc and Bharat Aluminium Company?
A. The status is same. We have created tremendous value... The government has all the inclination to give us the [remaining] share. It's a model that is a win-win situation where the government value of Rs 500 crore has gone over Rs 15,000 crore. So, it shows this model created value. It's very important that the government takes the view and moves forward.
Q. Are Vedanta's mining projects running the way you wanted them to be?
A. Our mining projects are not running the way we wanted. We want a reformation to take place in the oil sector. Cairn India has given Rs 24,000 crore as royalty and taxes, which is the highest in the corporate sphere. These are the priority sectors... the government is working with us. We want more production to take place.
Q. How acute is the energy security problem in India?
A. We have abundant amount of these resources [oil, gas and coal]. We are spending almost $200 billion on [importing] these. These can all be produced in India. Let world-class people come and develop our resources that can be used to generate electricity. India has abundant natural resources. All it needs is reform.
Q. What reform measures do you suggest the government should take?
A. Two things. First, our natural resources ' we must produce 50 per cent of gas and oil in India. Auction the natural resources in a transparent manner just like the 2G [second-generation telecom] spectrum auction has been done. The government will get funds, things will get faster. The whole world will be confident that they can come and invest in India.
Second, the reform agenda should be selling majority stakes in public-sector companies. It will be like America where all corporations are run by a CEO and the owner is a shareholder who can pull up the management. All these companies will be 10 times bigger and they can employ seven to eight crore people in the public sector when there's an independent CEO, not a government official... If the petroleum and mines ministries undertake reform in a simple manner, huge employment will be generated, tremendous growth will take place and huge investment will come. It will be transparent and it will be governance-oriented. New airports and telecom companies are running like that.
Q. What are your expectations from the new government?
A. It is very important to eradicate poverty and create jobs. One of the biggest things that can be done to create jobs is to boost manufacturing and develop our natural resources. Maximum employment can take place in the mining sector or processing those minerals and in manufacturing. I would like to see strong leadership in governance.
Q. What's your view on the Bharatiya Janata Party's prime ministerial candidate Narendra Modi as he too talks a lot about manufacturing and business?
A. We are out of politics. We are like a bird and we will go anywhere.
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