The story of Anil Agarwal, the Founder and Chairman of Vedanta Resources Plc., is not only of humble origins, but also of a person who has a knack for taking risks, doing experiments and creating a conglomerate that is spread across continents. Having grown up in bylanes of a small Indian town – Patna, he has created Vedanta Group – an Indian diversified natural resources multinational (as he prefers to call it) – from scratch and is present across commodities – zinc, oil and gas, iron ore, copper, aluminium, silver, lead, power, gold.
Belonging to the Marwari community of Rajasthan – who are known for their entrepreneurial abilities and business acumen in India for centuries – the two abilities come naturally to Agarwal. The same was visible at a very early stage of his life, when he joined his father’s small business of making aluminium conductors while studying in Patna’s Miller High School. And when he was approaching 20s, he moved to Mumbai (then Bombay) for creating his own niche in the society and in the business community away from his family.
Starting with trading in metal, he soon acquired Shamsher Sterling Corporation with the help of loans from family members and bank. For about a decade, he ran these two businesses, and then launched his own company by the name, Sterlite Industries, and set up a factory to manufacture jelly-filled cables. With his sharp entrepreneurial mind, he soon realised that backward integration of his businesses was required to keep costs low and that led to manufacturing of copper & aluminium, and he entered into mining of various minerals. Thus started the journey of Anil Agarwal as we know him today, the Mining Moghul.
Soon after opening up of the Indian economy in 1991, he moved to start India’s first private sector copper smelter and refinery and later acquired Madras Aluminium, a ‘sick’ company as per Government of India norms, thereby continuing the backward integration process of his business.
His penchant for taking risks and becoming the ‘Turnaround Man’ became known to the world when he acquired two loss-making and almost written off state PSUs – Bharat Aluminium Company (BALCO) and Hindustan Zinc (HZL) from Government of India in the early years of present millennium and converted them into leaders in their respective businesses. Today the success of both the companies is visible to everyone.
Envisioning bigger things & setting his eyes on world stage, Agarwal established Vedanta Resources Plc (which would later become the parent company of Vedanta Group) & got it listed on the London Stock Exchange, the first Indian firm to do so. Today, Vedanta Resources Plc is a LSE-listed diversified FTSE 100 metals & mining company.
Even after listing Vedanta on LSE, he continued with his acquisition spree and increased group’s presence in various minerals through inorganic growth across continents. This includes acquisition of Konkola Copper Mines in Zambia, Africa; acquisition of India’s largest private sector iron ore producer-exporter Sesa Goa; acquisition of South African miner Anglo American’s portfolio of zinc assets in Namibia, Ireland and South Africa and acquiring a controlling stake in Cairn India – India’s largest private sector crude oil exploration and production firm. The group has assets in Australia also.
In 2012, various companies and businesses of the group were restructured again to create a simplified organisation, Sesa Sterlite Limited (now knowns as Vedanta Limited), which is listed on the BSE and NSE – the two leading Indian stock exchanges and is under direct control of parent Vedanta Resources Plc. Later in 2017, Cairn India was merged into Vedanta Limited to create sixth-largest natural resources conglomerate in the world in terms of EBITDA.
Agarwal’s audacious story is still unfolding as this year (2017) he has acquired over 20% stake in his personal capacity in Anglo American – one of the top 5 global mining companies – to become its largest investor.
WINDOW TO THE FUTURE
Anil Agarwal has plans to invest $8-9 billion across his business verticals – oil and gas, aluminium, zinc, copper, power, silver, rock phosphate, etc. which are spread all over India. He is also looking to increase his oil production to 50% of country’s total oil output.
He shares, “We are planning to step up our production of oil and gas to half of India’s crude oil output (from 27% in 2016-17).” This is in line with Prime Minister Narendra Modi’s policy of lowering India’s import dependence on oil by 10 percentage points by 2022. “I am very passionate about our investments in India,” shares Anil Agarwal and adds that “we have significant expansion plans in all our businesses for expanding capacities of zinc, aluminium, iron ore, copper, power, pig iron, etc.”
Today, almost half of India’s non-service sector GDP is used to import oil and gas, fertilizers and chemicals, gold, copper, other metals and minerals & electrical machinery, etc. for domestic consumption. These imports are expected to double in coming few years.
Agarwal believes that with the encouraging business environment, these products can be produced in India in an environment-friendly and sustainable way and increased domestic production of these things will not help in saving billions of dollars of forex but would also lead to creating millions of jobs and eradicating poverty to a big extent.
“Thereby, it would lead to developing socio-economic infrastructure of the country and India taking giant leap towards development,” he says, adding that “the time has come for India to eradicate poverty and that can be done through increasing the contribution of minerals and metal sector in India’s GDP from existing 2% to 7%. This will create millions of jobs, boost ease of doing business and invite huge investment, he emphasises.
“We need Housing, Healthcare, Education and Employment for everyone. Let’s all come together to create massive alternative revenue streams without increasing the burden of taxes,” he says.
He is consistently endeavouring to eradicate poverty, create jobs and contribute to India’s economy and has been enthusiastically working for the good of the society through several initiatives taken by his Group companies and the Vedanta foundation, such as building hospitals, schools and infrastructure, conserving the environment, funding community programs that improve health, education & livelihood, and child welfare & women empowerment. Latest offshoot of this is setting up of 4,000 Nandghars – state-of-the-art Anganwadi (village child and women welfare) centres in India.
Agarwal has also pledged to donate 75% of his wealth to charity, fulfilling a commitment made to his grandfather long time back. He believes that high standards of Corporate Governance are critical for any business to succeed.