Essar will bring in strong shareholder value to Vedanta portfolio: Agarwal

With a strong balance sheet and a healthy debt:equity ratio of 1:1, Executive Chairman and Vedanta Group founder Anil Agarwal is bidding aggressively to grab a sizeable share in the domestic steel industry. In an interview on the phone with Aditi Divekar, Agarwal talks about his plan to turn around Essar Steel’s asset and his soft corner for Jharkhand's Electrosteel Steels. Edited excerpts:

Essar Steel, being a gas-based plant, has been an issue for its promoters all along. What interests Vedanta to bid for this asset?

The fact that the asset is gas-based is not a challenge for Vedanta because we produce our own gas via Cairn. Also, the iron ore needed for the plant can come from our Karnataka mines. So basically we can make raw material available for this plant at a much cheaper rate. Alongside, since the plant is coast-based, transportation should work out to be economical. 

Essar Steel is carrying a huge debt of Rs 440 billion. How will you turn around this plant?

It is a clean asset. The debt portion is not coming to us. We cannot disclose all details but can assure you that Vedanta has submitted a respectable bid for the 10 million-tonne plant. Vedanta has a strong balance sheet and I think this asset will bring in strong shareholder value.

How do you look at the Arcelor Mittal joint venture’s (JV) and VTB Bank’s offers for Essar Steel?

We do not have much idea about them but they too are highly eligible bidders for this plant. It will be good to have healthy competition with two-three companies bidding for Essar.

What is your plan for the Jharkhand-based Electrosteel Steels asset?

We have received the Letter of Intent (LoI) for this plant and Vedanta has submitted the bank guarantee as well. Jharkhand is a very progressive state and I have a soft corner for this state since I come from Jharkhand. I am quite excited about this asset in Jharkhand and we will do our best to have good investments there. 

Vedanta's iron ore operations in Goa are in trouble again, with mining having been discontinued after a Supreme Court verdict. What is your view on this?

It is very unfortunate that over 300,000 people employed in this industry directly or indirectly have become jobless. This kind of treatment to the mining industry will earn Goa a very bad name globally. We have enough natural resources in the country and we can responsibly make use of them and create jobs for ourselves. There are vested interests in stopping mining in Goa as some don’t want India to progress.