Mumbai: Elements 2008, a two-day event that starts in the city on Tuesday, may look like a vendor conference being organized by mining and metals company Vedanta Resources Plc. where a company can meet with its suppliers, present and future.
Meaning business: Vedanta chairman Anil Agarwal
However, according to Anil Agarwal, chairman of Vedanta, it is more than that—he claims it is an event that provides individuals an opportunity to become entrepreneurs, entrepreneurs an opportunity to participate in Vedanta’s growth, and the country an opportunity to ensure that minerals mined here are processed within its borders. “We will become one of the largest mining (and metals) companies in the world,” said Agarwal in a telephone interview from London where he is based. “(And) the more (the number of) people come with you (as suppliers), the stronger you will be.”
Agarwal declined to answer questions on any other subject other than Elements.
Vedanta has been in the news recently over a bid by its Indian subsidiary Sterlite Industries to acquire a strategic stake in development finance company IFCI Ltd.
Both Vedanta and Sterlite have also been in the news over the controversy surrounding the mining of bauxite in Orissa. The Supreme Court, in late October, set conditions for allowing the companies to go ahead with the mining.
Elements, which Agarwal describes as the first event of its kind, appears different in several ways: it marks a departure from the conventional practice of companies playing their cards close to their chest when it comes to strategy—Vedanta’s various group companies will make presentations on their growth plans and exactly what opportunities exist for vendors.
Second, Agarwal and his team are looking to identify more vendors, not less.
Companies usually prefer to work with fewer vendors because it gives these suppliers the benefits of scale and reduces the companies’ own sourcing costs.
But Agarwal maintains that many of the products and services Vedanta wishes to source are not available in India and that Elements will address this gap.
And finally, Vedanta and its group companies, Agarwal says, will “give whatever support they can” to the companies that wish to become suppliers, including taking equity stakes in them. That isn’t the purpose of Elements, he adds, but if some companies want financing support including equity, “why not?”
Around 900 companies have paid Rs5,000 each to participate in Elements, and 15-20% of them are overseas vendors, according to Vedanta. Agarwal says it probably cost Vedanta between $1 million (Rs3.93 crore) and $1.5 million to organize the event. The result, Agarwal adds, depends on how hungry suppliers are.
Several large companies are participating in Elements, says a Vedanta executive who did not wish to be identified because of company policy, but there are small ones as well.
“I have told my people to keep an eye on small vendors,” Agarwal says.
That’s something Vedanta has always done, claims Ashit Doshi, CEO, Doshion Ltd, a vendor to the company. Doshion makes water treatment facilities and, in 2004, received an order of around Rs35 crore from Vedanta—its revenues at the time were around Rs30 crore, Doshi says. He adds that the order helped Doshion graduate to the next level and help it win bigger orders such as the one from Mitsubishi for the water treatment system for a large power plant coming up in Taiwan.
According to information on Vedanta’s website, the company is in the process of investing more than $3 billion towards expansion of its business.