Q&A: Anil Agarwal,Executive Chairman, Vedanta Resources

'Nothing changes in Cairn India'

Anil Agarwal, executive chairman of Vedanta Resources Plc, says the Cairn India plan has been sudden. The billionaire says the $6.5 billion debt he plans to raise for the acquisition isn’t a problem. Edited excerpts of an interview with Business Standard:

How sudden was your move?
We never looked around for oil assets before. We negotiated for a couple of months and the deal was finalised. They looked at our Hindustan Zinc and Sesa Goa assets and how we turned it around. Cairn has a huge discovery in Rajasthan and we know Rajasthan well to operate these assets.

Why pull in Sesa Goa? Why couldn’t Vedanta acquire on its own?
We have to give a 20 per cent open offer. Sesa Goa has cash, in addition to all their planned capital expenditure. This money was getting a meagre five per cent return. So, we use the cash reserve for better returns.

This may hamper Sesa Goa’s plan to acquire iron ore mines, its core business.
Sesa Goa has no proposal for acquisition at this moment. In one to two years, it will again generate cash.

Is there a lock-in period for Sesa Goa for its investment?
None.

Why give a non-compete fee to Cairn Energy?
Tomorrow, we do not want to compete with them. So, for four countries we have given the non-compete fee. It is only fair to pay this.

Would there be any change in Cairn India, post the acquisition?
Nothing changes in the company. We have expertise to give vision, to make business plans. We will support them fully. They will work as a standalone company and any resource or expertise they need, we will support with that.

Would you now bid for future exploration licences?
We will support Cairn India in its E&P endeavours, not bid separately.

Any plans for forward integration, in terms of building refineries?
Government wants to build a refinery there; we will support them. We do not want to build refineries at this moment.

Is $6.5 billion debt going to be a concern for Vedanta?
All the debt is being raised in dollars and we are very comfortable with this.