Commodity prices will skyrocket because demand is good: Anil Agarwal

Metals, mining and energy conglomerate Vedanta is investing nearly $20 billion over the next few years not only to expand existing businesses, but also to enter new areas such as semiconductor manufacturing. In an interaction with Activity areaAnil Agarwal, Chairman of Vedanta Resources, shares his thoughts on the way forward for the company amid the global macroeconomic slowdown.

Has the Russian-Ukrainian war and its impact on the global economy had an impact on your bullish sentiment regarding India’s growth?

War is never good for anyone. They can solve everything through dialogue. However, in this geopolitical development, India has become a sweet spot. Every country has imposed sanctions on Russia and no one wants to do business with China. America sought an alternate source of supply. India and the Indians are in favor of it. The Indians have become trusted partners in all areas. Unfortunately, India does not have a great capacity to supply the world. For example, 95% of shipments here are made by foreign companies. Nowhere else in the world is this the case. It’s because we don’t have enough shipping capacity. Of all imports, imports of natural resources account for 65%, although India has it all. There is enormous potential. How do we harness it is the question. The government rightly came with the digital system, so that there is no delay in the process. India is the only country to have 20% young people. For India, time is running out. India has all the potential to become a developed country.

Do you see the inflationary trend on metals easing soon?

Commodity prices will skyrocket as there is good demand for renewable energy and EV (electric vehicle) projects. The consumption of metals will be multiplied by eight. All metals, including copper, aluminum and silver, will experience strong growth. India has all the potential and cannot depend on imports. Government policies should be very simple. Prospecting is very important. Above ground, we did well, but below ground, that’s it. Only foreigners don’t want us to produce. They want to make India a market.

Vedanta has shown interest in acquiring PSU, including BPCL and Shipping Corporation. Does the delay in divestment worry you?

We believe what the Prime Minister says…that the government has nothing to do. Then the execution is in the hands of the machines and they slow down. In this kind of delay, other companies would have fled the country, but we are like a normal person damn (daughter-in-law) of an Indian family in the village. For some years, we have had to endure pain. When I got married, I couldn’t talk to my wife during the day for years because she was in my mother’s shadow. It was the culture, but it tolerated and worked hard to achieve a different position today. But this culture is changing with the emergence of start-ups, fintech and the digital age.

Is the $10 billion fund you created to acquire government assets generating interest from investors?

Yes, there is a lot of interest but we can’t do anything about it. There is nothing on the privatization pipeline.

Mining in Goa has been banned for four years now…

The Goa mining ban issue is before the Supreme Court. The state and central government want to resume mining, but they are awaiting the verdict of the Supreme Court. It’s really a pity. India cannot afford to stop working. We need to maintain operations and change course because there is so much at stake, including people, jobs and investment. If production is stopped, inflation increases, imports increase and people lose their jobs.

How do you see the evolution of the Insolvency and Bankruptcy Code (IBC), given that your offer to acquire Videocon has hit a wall?

Doing business in India requires a lot of patience. In India there is a saying that the father begins and the son carries it out. IBC should be faster. Around 300 companies changed hands. This number could have been much higher if the process had been faster, because keeping the asset idle is not good. Whatever money comes in is good. Salvage should not be equated with replacement value and write-offs, leading to unnecessary controversy.

Regarding the semiconductor sector, have you decided on its location?

We have appointed a consultant, who will travel to several states. Within 60 days we will have a plan.

Published on

May 03, 2022

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