Vedanta plans to go big on power but rules out entry into retailing biz

Vedanta Resources is planning to go big on the power sector while ruling out entry into the petroleum retailing business.

The group, which recently entered the steel business by acquiring Electrosteel Steels, sees coal and power as strategic fits for its business.

Speaking to Business Standard, Anil Agarwal, chairman, Vedanta Resources, said: “We are looking at investing in the power sector because it is strategic to our business. Our captive requirement is huge. As and when something comes up, we will look at power assets though there isn’t any firm plan now.”

The group will bid for stressed power assets. It has an installed capacity of 9,000 MW, of which 5,700 MW is generated by captive power units of its aluminium plants.
 

Agarwal said close to $150 billion (Rs 10,950 billion) had been invested in stressed power assets, which were sitting idle because of lack of coal and lack of power-purchase agreements.

“These problems can be fixed. India has abundant coal and if we can allocate it, banks will be able to recover their money.”

On the insolvency process, currently underway for a large number of Indian companies, he said it was a short-term pain to people. “In the long run, they will think ten times before they take on debt unless it is viable. Banks should be given more teeth to protect their money,” he said.  

Vedanta recently signed contracts for 41 new exploration blocks in India out of 55 offered for auction under the Open Acreage Licensing Policy (OALP). 

The company has bagged blocks in Assam, Tripura, Andhra Pradesh, Tamil Nadu, Rajasthan, Maharashtra, and Gujarat.

The 41 blocks are spread across about 50,000 square km. The company operates six blocks in India and South Africa. It is planning to invest $2 billion in exploring them. Agarwal, however, ruled out investment in petroleum retailing. “We are good at exploration. I have limited resources. We want to hold on to upstream and are not planning investment even in the refining sector at the moment.”

The group is looking to invest $8 billion in various businesses. Of that, $2.5 billion will be in oil.

The group is planning to expand the capacity of Electrosteel Steels to 2.6 million tonnes. “We will see if we can take the capacity to 5 million tonnes. The plan is to invest Rs 50 billion in the long run.” 

The group is also planning to get into commercial coal mining. Though the government has announced plans to open up the sector for commercial mining, nothing has moved so far, he said.

For Anglo American, in which Agarwal holds a minority stake through Volcan Investment, Agarwal said: “I always encourage them to do more business in India. They are very good at mining. If India can increase the production of natural resources, the balance of payments problem will be addressed.”

He said the group delisted Vedanta Resources on the London Stock Exchange (LSE) because there was no point in being listed at two places (on the LSE and group company Vedanta Ltd listed in India). “Vedanta Ltd is listed in New York also and we have a stake in Anglo American, which is listed in London.”

On the group’s aluminium business, he said, “We had set up a plant in Odisha on the assurance of getting bauxite and coal. India has enough of these two minerals so it needs attention.” 

Vedanta is the largest aluminium producer in India with a capacity of 2.3 million tonnes and a 40 per cent domestic market share.