We believe, while ‘one arm’ is in India, we should've ‘another arm’ in Africa: Anil Agarwal, Vedanta

Billionaire Anil Agarwal, the London-based founder chairman of Vedanta Resources, said his group will invest one billion dollars in Africa, betting on the continent and India as the two growth engines for the metals and mining group.

"We believe, while 'one arm' is in India, we should have 'another arm' in Africa," Agarwal said in a recent interview.

Why Africa?

"There are three regions in the world with 1.3 billion people and more. China, India and Africa. What else is left for big business to enter," Agarwal said. Agarwal is betting on the popular estimate that Africa will double its GDP. "In every respect, Africa will grow," he said. The Vedanta group has invested more than $4 billion in Africa so far.

The going has been tough in recent years for Vedanta with oil and base metal prices declining and several decisions that would impact the group pending in the courts. However, Agarwal is much better placed than his peers operating in the resources space in India and abroad.

Vedanta, by virtue of its 62.9 per cent shareholding, garnered INR 6,580 crore from the windfall dividend, giving the group enough muscle to deal with large debt maturities coming up in FY17.

Vedanta is bullish at a time when its global peers —Rio Tinto, BHP, Glencore — have been divesting assets to stay afloat as commodity prices stay depressed on fears of subdued global economic growth with demand from big consumer China's waning. Agarwal reasons that these mining majors are selling assets because of bank pressure and to reduce the debt. "These companies are still healthy." Unlike them, Vedanta has been more focused on base metals and staying away from coal, magnesium etc.

"I think we have to live with this price," Agarwal said of oil and gas at $50, copper in the region of $500, aluminium at $1600 and iron ore at $50 per tonne. Vedanta, he says, will still make money as it is in the lowest quartile.

"My outlook is neither bullish nor bearish. We are a niche player and we are in businesses where demand still exists," he reasons. According to Agarwal, what works for Vedanta is that its main businesses are located in India, where certain sectors are growing in double digits.

"India gives us an advantage. We are in the 3rd quartile in costs and very competitive and that helps us," Agarwal explained. That no new mines are coming up also helps Vedanta.

On being asked about his outlook on Modi Government, Agarwal said "MODI GOVERNMENT "If you ask me, the prime minister's office must monitor 20-25 industries, which will account for 2 per cent of India's GDP. If the government gives support from A-to-Z for these industries, it will encourage several small and medium enterprises to come up, he reasons. On the new mineral exploration policy, Agarwal said while it was in the right direction, the government could do more.