Vedanta demerger: Anil Agarwal sees breakup bid as ‘win-win’

A: This is the first generation that has grown, and we have a huge support. This company is a very special company, I always thought about how I can create value, and how to make my country a world-class country and as a developed country. We have taken our resources from London and overseas and put them into India, about $6 billion is there in the parent company and we have so much of assets there. More than that we have the largest copper business, about 65 percent of the holding of Vedanta, we have a huge dividend inflow, and the brand fee is there. So, we are very comfortable. We have a payment due in January and August. We are completely lined up and we have made a plan with the bondholders and we will be announcing shortly. We have a phenomenal response for our steel and iron ore sale which can take care of the entire debt and we believe that by March we will be able to complete the transaction too. So that is for the parent company. As far as Vedanta is concerned, it’s a very special company, each of our products is unique product and very important for the progress of India. We produce the largest oil and gas in the country, oil is not going anywhere. I have a feeling that the oil price is going to be $120/bbl and we will double our production and that is what we are planning, including gas. We are the largest producer of aluminium, which is a green metal. Copper is very important; we are looking for a copper mine. So, all these assets which we have -- silver is a very big thing. So, the world is looking for the pure play. So, demerger will create a tremendous value. The world is looking to invest in India, and they are looking for a nice structure and no structure will be better than our structure where they can invest in this company. Compared to the world, we have a very low valuation, and I am very excited about it. Also, changing the management whereby we are bringing world-class leaders who will be fully incentivised to run this business.

A: Yes, by March we will complete the transaction. It is a unique site where anybody wants to produce green steel, this is the only site where we have gas availability, and complete infrastructure availability, as somebody wants to produce 15 million tonnes -- and internationally people are very keen to have some step into India. So, this is the best opportunity for them.

A: Absolutely. We have about a billion-dollar payment in January, and a $500-600 million payment in August, both are completely lined up. We are talking to the bondholder, and everybody is very excited, and we are making them secure. So, this will be very exciting for them, and we are looking to close this. So, once and for all this will be out of the way. We are also looking as to how we can reduce debt or make it a zero debt on the top and steel and iron ore will take care of that.

A: Both the options are on the table. What suits us we will get it. If we get good terms, we will refinance, otherwise, we will have enough cash, so we can work out. But people are open to both. There is no asset like this, so we are working, and we will get back to you, but for sure 100 percent payment in January and in August-September has been taken care of, both options are there either refinancing or making payment from ourselves? Refinancing is completely lined up, but we are also looking at whether we can pay it from outside.

A: This is a win-win for everything; 2/3rd voting will be from our side – Vedanta Resources, which will confirm that they will vote in this favor, and I have no doubt that this will create a great value for everybody including the government, and all the shareholders. For me, my shareholders are very important, especially the retail shareholder who has really supported me and I am always conscious of how I can make sure that they are comfortable with us.

A: You will be surprised that today we hardly use laptops with youngsters, and I believe that the time has come that everybody above 15 years old will have a smartphone, a laptop, and a scooter (a gear-less scooter in India) and all these require glass. We import 100 percent glass. We are the only people, at Vedanta Limited, who make glass in Korea and Taiwan and we have already started the work and we are looking forward to producing this glass in India. Also, for the semiconductor, we have a tie-up, but because of our confidentiality, we cannot disclose the name of the semiconductor. It will be one of the finest semiconductors that will start step by step in the sense we will be having the foundry, we will have complete assembly and the supply chain for the semiconductor and Phulera, which is a very good site, and we will be putting in there. So, whatever we have done so far, we have completed, and I have no doubt this will be a great help for the country, and everybody literally says that Vedanta can do it.

A: We have overhauled debt compared to our peer group and other companies. We are very moderate, we have much less debt than the other company overhaul. People are looking forward whether it is the Middle Eastern, American, European, or Canadian, everybody wants to invest in India, there is not enough structure, and we have one of the finest assets for our shareholders and this gives a great opportunity for my shareholders where they will have 6 companies and in time to come can be 10 companies because semiconductor can go as a separate company; we are not doing it at the moment. The glass company can be a separate company, we have ferrochrome, and we have magnesium. So, those opportunities will be phenomenal, and it will be very interesting for our shareholders, a pure play and instead of 1 share they will have 6 shares now and they can have more flexibility. So that will very much benefit our shareholders.

A: All these down the line, when de-merge happens, people are looking forward to investing because we will be producing green aluminium. People are looking to take small equity, large companies, and large private equity, they are looking forward. So, whether it is oil or gas, a strategic partner can come in. Oil, gas, and copper - very keen people are there. Zinc is very interesting.

Recycling, we have the largest recycling tailing with us in Hindustan Zinc and if you look at Korea Zinc, which produces 60-70 percent recycling material, how much shareholder value is being created? So, this is also very exciting when we are de-merging the recycling because it's a completely separate business. So, recycling material, they have a lot of other precious metals in our tailing so that can be also a great business.

Something like this where you have natural resources which is very important, our $400 billion goes into the natural resource, we are part of it at the same time semiconductor, glass is so important that will also will help. In our other company if you look at STL we are a renewable company, there are so many other companies that we have in the group as Vedanta Resources, which is under Vedanta Resources, each of our products is tomorrow's product, and the world is looking forward, a structure where they can come into India.

Because India today is a double-digit growth, and government will be very, very pleased with the kind of investment that will come. The best thing will happen at least 500 more industries will come on the basis of our product because all our products are B2B and that will have to be processed and people will be looking at SMEs, and startups - those people can develop these products and that is more exciting for me. More and more businesses will be created more and more jobs will be created.

A: This is a real thing, it is a very transparent governance-oriented company, it is run by the top professionals, and it has a so much demand-supply gap. As the demand is growing tremendously, one thing I can assure you, is this demerger, is going to bring a lot of wealth creation for them, at the same time, it will have a nation building, because all these materials we are importing, which we substitute, and a lot of opportunity for a shareholder to invest, even the 500-700 industry which we will be setting up or are being set up to process this material. So those lot of opportunities, it is like under the banyan tree, we put everything together, they grow slowly, but if you take them out, they will have their own speed. So we are looking forward, we are bringing in these partners, bringing these professionals who will have a stake in the company, world-class people and make them comfortable and create value for our shareholder.

A: I am bullish on the commodities - oil and gas, copper, zinc, silver, aluminium, these are tomorrow's metals. The transition energy that is happening in the world, the world is going to green, all these metal is the most ingredient the way I can see. Our semiconductor glass again is great, the prices are looking up. I have no doubt, especially in India, that India will show how we can move forward and the way our shareholder and the share market in India is tremendous. The HNI, these hedge funds, the private equity even the local have huge portfolios that will hold on and take forward our country.