Vedanta eyes Electrosteel for value addition, says chairman Navin Agarwal

Diversified natural resources company Vedanta Limited is betting on Electrosteel to add value to its iron-ore mine located in Jharkhand. The steel producer is undergoing insolvency proceedings. On the sideline of company’s world-class cancer hospital inauguration in Chhattisgarh capital, company chairman Navin Agarwal tells R Krishna Das about the strategy. Edited excerpts:

We understand that you are opting out of Essar bidding, but are upbeat on Electrosteel.
We are a resource company and Electrosteel (bidding for steel producing company undergoing insolvency proceedings) should be considered as part of our iron-ore strategy. We have got an iron-ore mine in Jharkhand and we want to see it in an integrated way. We will go for mining and add value value through Electrosteel.

Is the raw material crises preventing company to bid for big steel players?
There is no shortage of iron-ore or bauxite in the company. Steel sector is right now not in the priority. In our existing projects of copper, oil and zinc, the return is significantly more attractive than to invest it in any other opportunity.

What are your expansion plans in the existing projects?
We are investing $8-9 billion in next two to three years to ramp up capacity under a major expansion programme. The main expansion will be in the oil and gas sector. The current capacity is 180,000 barrels per day, which company plans to enhance to 300,000 barrels in the first phase and finally to 500,000 barrels in next three years that will be India’s 40% oil output. The company will be investing $3 billion on the project.

What are the plans in other sectors?
The second expansion will be in Zinc, both in India and South Africa, Namibia. The current capacity is 1 million tonne (mt) that Vedanta Limited plans to scale up to 1.2 mt and finally to 1.5 mt. Under the plan, the silver output will increase to 1,250 tonnes from 750 tonnes besides increasing the capacity of zinc international to 600,000 tonnes. The company will double the copper output from 400,000 tonnes to 800,000 tonnes.  

How are you going to fund expansion? Will you borrow?
No, the company will not take debt. The expansion plan will be self-funded and the company will raise the fund from its internal resources.

How do you see your revenue growth during next financial year?
The company has a very strong balance sheet. In the next financial year i.e financial year 2018-19, we will be increasing our revenue by 50%.

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