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| 'Our focus is to reduce production cost' | |
| Q&A: Anil Agarwal | | Nevin John / Mumbai December 2, 2008, 0:22 IST | |
 London-listed Vedanta Resources has cut its capital expenditure by $5 billion to counter the sharp fall in prices of non-ferrous metals. Chairman Anil Agarwal tells Nevin John that the company has a $-7-billion credit line and would generate a few more billion dollars through internal accruals for completing the scaled-down capacity addition programme. Excerpts:
Prices of base metals have fallen sharply since the beginning of October. In fact, for zinc and aluminium, prices are below the marginal cost of production for some global players. As a major non-ferrous metals player, how do you plan to live up to the expectations of your investors?
Our primary focus is to reduce production cost. Through internal initiatives, the group companies have achieved reduction in input costs. To cope up with the financial downturn, the companies will go ahead with various productivity improvement plans.
The volume and cost are the most important factors for the companies concerned. We hope the situation will change fast.
What will happen to the huge capital expenditure plan of the group companies, including Sterlite and Hindustan Zinc, after the credit crunch?
We had a capex plan of $30 billion. As of now, we have spent around $10 billion. In a move to conserve capital, the company has decided to cut its remaining investments by $5 billion to $15 billion.
We have $7 billion cash in our balance sheet and the rest would be generated through internal accruals. As we are financially steady, we will be able to complete our projects on time.
Vedanta had an ambitious restructuring plan, which was dropped after changes in the global financial markets and investor feedback. How do you plan to take it forward?
We have withdrawn the restructuring plans at this point of time. Eventually, restructuring is the best thing we can do for the company and for the shareholders. At an appropriate time, we will take it forward.
What happened to the acquisition of Asarco, for which you have recently submitted a revised offer?
We have withdrawn the offer for Asarco after the fall in copper prices. If something comes up at a reasonable price, we will consider acquisition.
Your call option to acquire the government’s stake in Bharat Aluminium Company (Balco) had been exercised long ago. What is the latest on this?
We had given our proposal for acquiring the government’s residual stake. If the government does not respond, the only option left before us is to go ahead with an arbitration procedure.
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