Vedanta To Consolidate India Operations

Vedanta to consolidate India operations

By Staff Correspondent, The Hindu

23rd February 2004.

MUMBAI, - Vedanta Resources, which was the first primary listing by an Indian company on the London Stock Exchange (LSE) in December 2003, has chalked out a strategy to consolidate its position in the Indian metals industry.

VR's capital programme involves investment of $2 billion in India and according to Brian Gilbertson, non-executive director and Chairman, Vedanta Resources, the $ 870 million raised offshore, will be brought back and invested here. Vedanta will also be appointing one or two non-executive directors this week.

Essentially, Vedanta has controlling interests in Sterlite, Orissa Alumina, Malco, Hindustan Zinc and Balco. Vedanta acquired 5 per cent of Sterlite's equity in January taking its holding to 65.8 per cent. Sterlite also announced $350 million rights issue in December 2003.

According to Anil Agarwal, CEO and Managing Director, VR, "the company is positioned to meet metal demand in India. In zinc, through Vedanta-Hindustan Zinc, we have 62 per cent of the market and are the only integrated player, in copper, through Sterlite, we have 42 per cent of the market and are one of two players and in aluminium, through Balco and Malco, we have 21 per cent of the market and are one of three players.''

In zinc, the company is planning a $320 million expansion from the current 2.10 lakh tpa [210,000 tonnes per year] four lakh [400,000] tpa zinc ingots by January 2006. In copper, the company has a 1.80 lakh tpa of copper anode and cathode and 1.40 lakh tpa copper rods and is expanding the anode and cathode capacity to three lakh tpa by June at a cost of $80 million.

In aluminium, it has a 135,000 tonne capacity and is adding a 2.50 lakh brownfield aluminium smelter and power plant at the cost of $800 million to be ready by January 2006. The company is also setting up a 1.4 million tpa alumina refinery and a 85-125 MW captive power plant at a cost of $800 million.

The company's strategy revolves around optimising the asset base by de-bottlenecking plants, expanding capacities and driving down unit costs. Also, the completion of the two major projects for the 2.50 lakh aluminium smelter at Korba in Orissa and entry into the alumina market through the 1.4 million tpa refinery. Mr. Gilbertson said half of the output would be used captively and the other could be supplied to consumers.

Third, the company will go in for increasing shareholder value by using IPO (International Public Offering) proceeds for growth, consolidate Hindustan Zinc and Balco ownership and offer a medium term exchange offer for Sterlite shareholders.

The company is also looking at growth opportunities inside and outside India. Regarding the exchange offer, Mr. Gilbertson said in future, VR and Sterlite could see a consolidated shareholder base. Regarding opportunities, Mr. Gilbertson said, "Further privatisations would be in the frontline. Nalco privatisation is unlikely to happen soon. Orissa is a mineral-rich state and we could see other opportunities in areas like even Iron ore mining."

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