Once the refinery operates at full capacity, within a year or two, asserts a confident Agarwal, the group’s India turnover can increase from $16 billion at the moment to $25 billion.
Unlike RIL which is also facing all manner of roadblocks in its expansion — apart from aluminium, Agarwal’s $3-billion investment plan for Cairn also depends on project clearances — Agarwal says he is not planning any overseas investment. “We have our hands full… Managing what we have is enough for now,” he says.
Will he bid for new oil blocks later in the year when the government announces the next round, given Cairn’s approvals are still stuck, including $1 billion in cost recoveries for old projects?
“Ab kumware hain, to ladki to dekhne jayenge”, Agarwal breaks into a laugh (a bachelor will go and meet girls, whether he marries them is a different matter).
No country of India’s size, Agarwal justifies his enthusiasm, can afford to not produce at least 50% of its energy needs – “we produce 10%”. So, just like Orissa just has to allocate a mine, he says, the government just has to clear policy. It is still very slow, he says, but Cairn which produces 1.8 lakh barrels of oil a day can ramp this up to 5 lakh barrels in two years if the necessary clearances are given. He has a $3-billion expansion plan contingent on this. At 5 lakh barrels, this means an import saving of nearly $12 billion – India’s current import bill is around $164 billion.
If the price of oil is $100 a barrel, he says, we produce oil at $4, and earn a profit of $15 – the government is getting $81 per barrel. “They should be running after us to produce more oil, not the other way around”.
Agarwal produces 30% of India’s oil, 95% of its silver, 65% of lead, 70% of aluminium, 95% of zinc and 50% of the country’s copper. “We have raised oil production 50-60% since we took over Cairn, Hindustan Zinc’s production is up 7 times and that of Sesa Goa Ltd 3 times.” Give us clearances, he says, and the scope of growth is enormous. Accompanied by his group finance director, Agarwal points out that, even with the refinery operating at low levels and based on bauxite bought from the market, he is breaking even – he adds that, at Rs 50,000 crore, the refinery along with the power plant, the smelter and the aluminium plant is among the cheapest in the world.
On why he’s keen on buying the residual stake in Balco and Hindustan Zinc (Vedanta Group has 49% stake in the former and 65% in the latter), Agarwal said that it’s merely for “housekeeping”. “The government had said that it wants to divest in these companies, so, once they do, the structure would be clear,” he added. Though HZL has cash reserves of around Rs 21,000 crore, he says there is no proposal from the government for a special dividend prior to the sale. Recently with the attorney general giving a nod to move ahead on selling the residual stake in the company, the government is contemplating of an open auction for the sale. Asked for his response on this, Agarwal said, “It is not very fine with us but we are ok with it. Once this happens it would become a normal public company”. He said that the residual stake was a non-issue turned into an issue by the government when its job should be to create more employment and increase the GDP.