VedantaNSE 0.04 % chairman Anil Agarwal says Essar Steel is a great asset although he finds the Rs 42,000-crore bid by steel magnate Lakshmi Mittal quite high. He added that the matter was at the stage of determining the eligibility of bidders, for which Vedanta has the best credentials.
However, if Mittal takes over the company, Agarwal said as a nationalist he would welcome it if he comes with a bag of money and good governance. On insolvency, he said the process gives short-term pain for some, but is good as it brings discipline and protects money collected by banks from the common man.
In an interview with Himangshu Watts, he also said the rupee would have been stronger if production of natural resources had not stopped. He added that the US-China trade war had made India the dumping ground for aluminium. Edited excerpts:
Is NCLT process good for economy?
India is moving ahead and this process was required. It’s a very transparent method. In the long run, good; but people are not used to it. The discipline being brought – I don’t think people are ready. In the short term, it’s definitely giving pain to some. The unnecessary protection is going away. Also, how can we tolerate misuse of taxpayer’s money going to the banks. That money should not be exploited. A loan cannot be taken as income. There were many bad habits. There was no law, so there were no teeth.
You have shown a lot of interest in the steel sector…
Essar, we have bid. In our shareholders’ interest, whatever will happen will happen. We are eligible and we are clean. Eligibility-wise we are the best.
Do you think ArcelorMittal’s bid for Essar Steel is too high?
Who am I to judge? The Rs 25,000- crore (bid) was high, Rs 37,000 was also very high and Rs 42,000 is also very high. But it’s a nice asset. It’s difficult to build such an asset in India. It gives a platform to move on and everybody is looking, and we are eligible.
Will you beat the offer?
That stage hasn’t come. Right now, the issue is eligibility.
What do you think of Mittal’s entry?
His family has been a major player in India for years. India is a democratic country and as a nationalist I feel whoever brings a bag of money and governance is most welcome.
What do you think of the business climate in India?
Fundamentally, India cannot remain import dependent. We have to debate how to increase business. It was settled in Vajpayee’s time that the government has no business to be in business. Communist and socialist countries run their businesses, but not in a democracy. In public sector companies, existing management is phenomenal. We have taken over companies but the same management has delivered so much more. The government has to give access to private sector. Maximum revenue and jobs have to come from the private sector.
What do you gain from delisting your company?
When we listed, the whole purpose was to raise money. We acquired assets, government got revenue, millions got jobs. The purpose was served. Indian stock market has one of the best governance in the world. Fifteen years ago it wasn’t like that. There were all kinds of scams and problems. It was not easy. Now, it is a very mature market. At the same time, I have a 21% holding in Anglo, which is already London listed.
What is the impact of the depreciating rupee and high oil prices?
The rupee has depreciated. Current account deficit is rising. Why has the rupee depreciated? Due to a lot of imports – oil imports, copper plants being shut down (and in turn leading to) copper being imported, Goa’s mining has shut down. I don’t understand why in India, they shut down production. India has all the resources. We should produce more ourselves. Copper, aluminium, coal, iron ore are being imported. All these are produced in India. Policies can stop $20 billion of imports in the short term.
What is the solution?
We all grew up with public sector. But today, by and large, it is different. May be 20-30% companies are owned by individuals. We have to change ourselves. There cannot be a more progressive government. In 15 years, you see where Gujarat has gone – because of the leader’s entrepreneurship, industry has come to India. The same chief minister is sitting here as the PM. Like in cricket, a star batsman can take time to settle down. Nobody can stop India from becoming a $5-trillion economy.
Does US-China trade war worry you?
I’m very concerned. India has to protect itself. You see, in aluminium, India has been made a dumping ground. What was going to China is now being dumped in India. China has put tariff barriers. All the aluminium that went to China, is coming here. Imports have grown 38%. In past two months, they have gone up further.
What about environment norms and the plant closure in Tamil Nadu?
We are totally committed. We never allow building in violation of environment or safety norms. We will not tolerate that people who exploit India, and not let us produce, and create jobs outside. In TN, we were running this plant for 22 years. This is a mother plant to supply raw material to 100s of industries. Copper does not fall from the sky. It has to be processed. It doesn’t grow in fields, it has to be produced. There are hardly 100 plants in the world, and we claim that we have the best process. This was very, very unfortunate.
Definitely, we are import-substitute people. Zinc, Copper, silver and lead – we are the largest importer. Because of us, imports have reduced, and people supplying these to India don’t like it. Such incidents are very unfortunate. We have to think about the country. I can’t go and fight on the border, but I can produce oil at $6 and make my country prosperous.
What about the country’s oil sector, where you’ve won many blocks?
Cairn is very strong, and we are determined. For most blocks I’m confident the result will be positive. We’ll invest may be Rs 20,000 crore or Rs 30,000 Cr. We act like a catalyst. In every business, people don’t want competition. I want more people to come.
The private sector’s experience in O&G in India has not been very good…
Now it will be good, because we will show results. The policy of the government is revolutionary. Earlier, tenders required 50-60 clearances; now it only requires 7-8. This kind of policy is fantastic. It is making a very good roadmap.
Cairn had many problems and went into arbitration. So did RIL…
It was very unfortunate – this retrospective tax and arbitration is not required. You have to sort out things across the table. The government understands that.
What are the challenges in this sector?
People will not come to produce oil in the country if you don’t give them incentives. We have to sell some of our oil to establish global price. Also, for existing contracts we have a very clear-cut right to extend them. You cannot increase revenue there. The government’s purpose is to increase production. It shouldn’t focus on maximising revenue. There is so much oil in the country, but the government cannot take it out. There has to be incentive, else people will not come.
