Govt must settle retrospective taxation issue: Vedanta's Anil Agarwal

In a Q&A, he also says there is need to project that India is not averse to companies making profits

On a day Vedanta Resources announced Kuldip Kaura as interim chief executive officer (CEO), company Chairman ANIL AGARWAL spoke to Jyoti Mukul on the group’s completion of restructuring and the need to project that India is not averse to companies making profits. Excerpts:

The group has announced an interim CEO for the holding company and Vedanta. In the past, too, Cairn India had an interim CEO for a long while. Why is it that the group has interim CEOs?

We had Tom Albanese, a stalwart, as CEO. The new appointment is an interim one, but we want to get the best person, and look both internally and externally for this. Getting the right person takes time. The companies and divisions — aluminium, copper, oil, iron ore, etc — have their own CEOs, who are empowered. We need a head to coordinate everything. The buck stops with him. Kuldip Kaura has been CEO and he understands the company. In another six to seven months, it should be finalised.

The merger of Vedanta and Cairn India took a long time. What are your plans for the company?

In India things take time. The merged company is another BHP and produces 1 per cent of GDP. It is a national asset. It will run very well and gives direct and indirect employment to about 80,000 people. We paid $6 billion in tax last year. Now, we are looking forward to brownfield expansion in all areas and are going to invest Rs 40,000 crore over three years. We are targeting a 50 per cent increase in the production of crude oil, zinc, and iron ore.

Is the group looking at more consolidation after this merger?

No more restructuring is required.

Earlier this year, you made a personal investment in British company Anglo American by buying a 13 per cent stake. It is said to be a hostile bid. What is the outlook for this investment?

I like the company. We have a lot of synergy because it is the biggest diamond producer in the world. It produces copper, and coal on a large scale. At the moment, this is a personal investment and we have good relations with the company. We will see what we can do together.

We had given the company a proposal earlier to merge Hindustan Zinc with it. But that discussion did not continue. At this point, there is no plan to acquire the company. We are getting a good dividend payment and will continue to be an investor only.

Is Vedanta looking at acquisitions?

Nothing on the radar. Our hands are full. We are very excited about our investment plans. The metal prices are good and we have a good management. This is very exciting.

There were discussions within the government to sell the frozen share of Cairn Plc in Vedanta through buyback to your group. Will you be open to it?

Nothing has come to us. I will strongly recommend that the government settle the tax issue because retrospective taxation is giving bad publicity. It is the last remaining issue that the government needs to resolve for getting global investment. 

They can settle it through negotiations and get it cleared by the Cabinet.

Is there any movement on Vedanta buying the government’s residual stake sale in Bharat Aluminium Company and Hindustan Zinc?

We have not heard anything from the government on this. The stake value is very high. This is a good time to encash their investment.

What is your assessment of commodity prices? Is there enough demand?

We are in a difficult business. No new mines are coming up globally. Similarly, finding oil is difficult. At the same time, demand is going up. The world economy is doing better and China is still growing. In India, we are selling whatever we are producing. I am bullish about the price of commodities, including oil.

It is believed that the move towards a low-carbon economy and non-fossil fuel will impact oil demand.

It will impact demand but there are reports that no new investment is happening. Electric cars and solar are coming but still oil is oil. In India, we import 80 per cent of our oil requirements. My personal view is that oil prices will increase.

What are the regulatory issues that the private sector is facing for growth in India?

We have to sell our Barmer oil at almost a 10 per cent discount. The refinery that buys oil from us sells it at the international price. The regulatory framework needs to change so that we get the international price. We are an existing player but no new investment will come unless they get the international price.

It is important that we increase production, whether we export or sell in the domestic market. For that, Indian oil and gas producers must get a free hand in pricing at par with international prices. Or else no investment will come. This is important, and the government is making efforts to do that to see to it that India becomes a profitable market for oil. We should be more interested in looking at how much oil is being produced than in how much profit companies are making. Investors have a lot of opportunities. Prime Minister Narendra Modi has invited investment in India. The country should be seen as not being averse to companies making profits. It is good that they make profits so that they can be reinvested. If they are not allowed to make money, they will always be scared whether they can make money here and will go elsewhere. 

The government should promote investment in mineral exploration. India also needs reform in forest clearance. It takes six-eight months to get a clearance. It has to be simplified. It will create huge employment. Another thing that the government should do is start trusting entrepreneurs by allowing self-certification for various approvals. Self-certification is a big responsibility since if you do not fulfil it and have given wrong information, you will be more liable.

Where do you see growth for your company? 

It will be in oil, zinc, and iron ore. Besides, aluminium is a very important sector for us. We have prospective mining in Chhattisgarh for gold.