BackAnil Agarwal bets on SMEs
Anil Agarwal says the spurt in manufacturing growth in India coming from SMEs will help global economy by making up for the slowing demand for metals in markets like China
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New Delhi: Anil Agarwal, group chairman of UK-listed natural resources giant Vedanta Resources Plc, sees the next spurt in manufacturing growth in India coming from a new wave of small and medium enterprises (SMEs), which will also help the global economy by making up for the slowing demand for metals in markets like China.
At a conference organized by industry chamber Confederation of Indian Industry (CII) in New Delhi, Agarwal said small and medium companies in the metals industry has a tremendous opportunity for growth now.
“Now, India has sufficient power. (Metal) consumption is going up and banks are looking forward to borrowing proposals. India is a country of entrepreneurs. It is time to create new SMEs," said the founder chairman of the natural resources company that reported a revenue of $13 billion in 2014-15.
Agarwal is optimistic about SMEs leading economic growth as around 95% of industrial units in the country at present are SMEs and 40% of the value addition in the manufacturing sector takes place in the segment. SMEs are also a major employment creator. One area where these enterprises suffer is lack of easy access to credit as many of them do not have assets to pledge. Agarwal said banks are now eager to lend to SMEs.
Vedanta has presence in India’s oil and gas, copper, aluminium, zinc, iron ore and power industries. Agarwal said that India at present consumes 20 lakh tonnes of aluminium, which is expected to rise upto 2 crore tonnes.
“The future growth in aluminium consumption is being driven by electrical, automobile, railway and aerospace industries," said Agarwal. Vedanta-owned Bharat Aluminium Company Ltd. (Balco), the largest producer of the metal in the country, has a capacity of 23 lakh tonnes and has mines in Chhattisgarh and Odisha.
Agarwal believes government’s efforts to boost domestic manufacturing and to provide power and housing for all will drive increased demand for metals from the electrical power, transport and construction industries. There is also opportunity for developing value added products, including alloys for defence and automobile applications, Vedanta said in its annual report for the year 2014-15.
Agarwal said with government support, Vedanta subsidiary Cairn India will be able to produce nearly half of the country’s crude oil requirements and help in reducing the oil import bill. Cairn’s Rajasthan block produced 6.4 crore barrel of oil equivalent (boe) or 23% of India’s domestic crude oil output in 2014-15. Since the company’s Rajasthan block went into production in 2009, it has produced more than 30 crore barrels.
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