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“Failure is the first step of success. I failed miserably. Failure after failure, failure after failure, failure after failure. I had even gone into depression for a couple of years," says Vedanta Resources chairman Anil Agarwal in a candid interview with Sruthijith, editor-in-chief of Mint, for the first episode of ‘The Sketch’, a podcast that aims to help readers know business leaders better-- their convictions, methods, influences.

Listen to the podcast here.

A Mint Production.
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A Mint Production.

Agarwal moved to Mumbai from his hometown Patna when he was 19 years old. He started with scrap metal trading business in 1976 and is today leading a $15 billion multinational mining and commodities business, with a diversified portfolio having interests in aluminium, zinc, iron ore, steel, copper, oil and gas and power. He has been a major participant in India’s disinvestment initiatives as well. He is very bullish on India and recently signed an MoU with Taiwan’s Foxconn to set up a semiconductor manufacturing facility in India. In this podcast, Agarwal speaks about the succession plan at Vedanta, rising importance of minerals in sectors such as semiconductors and electric vehicles and why he watches movies. Edited excerpts

Your announcement about setting up a semiconductor facility in India with Foxconn has generated a lot of curiosity. What can you tell us about it?

India is in a very sweet spot. People are aware that India is emerging, silently. For me, it was very important that we work through technology, and semiconductor is very important, be it for automobiles or electronics. India needs to import $15 bn worth of semiconductors. It’s because of the shortage of semiconductor that we haven’t been able to run our factories at 100%. We are manufacturing glass and optical fibre. So, it was natural for us to move into semiconductors. Foxconn is one of the largest and the best companies in semiconductor manufacturing and will be our full-fledged partner. We are in the process of selecting a site.

Do you have any timeline for the production to start?

In two years, we will start production. In India, when the government is supportive, people are supportive. I am confident that we will meet the target of commencing production in two years and India will change because of this.

Are you a spiritual person? Do you feel like some divine force has played a role in your journey?

I am not religious. But every time I read something spiritual, I find something new in it. It gives me strength to overcome my fears. I have never disclosed this but every single day in the last 22 years, I go to the Krishna temple in the morning. Initially, I used to give 10 cents to the temple and bargain, “see, I’m giving you something, you have to give me something’. Today, I have surrendered to Him. I’m like the servant of the universe and I do my duties to the best of my best of ability. Criticism has never shaken me; it has made me a little bit fearless. And I will never do anything intentionally that is not right.

Can you talk a bit about what makes the world of commodities tick?

The world wants India to be an import-based economy and we have been habituated to importing goods and think that there is no other option. We must change this. We have good natural resources but the world doesn’t want us to produce, only be a market. And this perception has been created that NGOs can be sent to change our mindset.

We can't live without metal. We can live without oil and gas. Even today if you go for renewable energy, whether you go for EV (electric vehicles), eight times more metal is required. Though we have the natural resources, we are still forced to import it.

So what is holding us back today? Is it government policies?

The government policy is working. They have to start believing that making money is not a sin. Our entrepreneurs should be able to sell their discoveries and make money. It should be like buying shares and selling them at a higher price. There is so much funding available for entrepreneurs to do exploration. Even if they fail, they are fine. But the right to sell their discovery cannot be given back to the government.

Is that practical?

See, we have to move forward. Only then will you be able to solve problems. Failure is the first step of a success. I have failed in my life miserably. Failure after failure, Failure after failure, Failure after failure. I have even gone into depression for couple of years. I didn't know what to do, but you come back, tighten your belt, touch the feet of your parents, go to a temple. It must be 20 years back. Suddenly you find that things are not working for you. I couldn't sleep for a minute the whole month. I lost all my hair, and I didn't want to meet anybody. But you fight, you pray, you make yourself strong, and then when you come back, you never look back. I always had my depression tablet by the side of my bed, but I never took it.

Thank you for being candid about your personal matter. Now, for the big question: Are we in the middle of a commodities supercycle?

We are definitely in the middle of a supercycle. And these prices are going to stay. I pray that it should not go further up, because India will be in trouble. Inflation is high. I read somewhere that the price of oil can go up to $185. Yet, India has the capacity to produce at probably half or quarter of the cost. So, it is a very interesting time. The world wants to invest in India: we have entrepreneurs here, we have one of the best governments today. This is the time you will see India move forward.

Do you feel that your country has not listened to you now that the sensitivity around commodities has really come out?

I think the government has. I am listening to the government all the time. Like Prime Minister Modi says we are not revenue-minded, we are production-minded. He says the government has no business to be in a business. That's supportive. India is a democratic country, but sometimes it will take time. And where we come from, we have been taught to remain patient.

What is up with BPCL? You have expressed an interest, what is the latest development on this front?

It (BPCL) is too much in the news. Government has said they are going to change the terms, they are not going to sell the company as it is. Privatization is going to happen soon. I wish it will happen. As and when it happens, we will see.

You have a knack for picking up companies, be it Balco or Cairn, Now, with commodity prices going up, would such assets be as attractive?

Our company is going to make $30 billion revenue this year and an estimated $10 billion profit. We have 100,000 employees. We are going to invest $20 billion dollars in four years. We are going to make 50% oil production in the country. I want to be the largest zinc and silver producer. I am looking at aluminium also. We have two business. One is old economy, which is about commodities. And we have a new economy where we are into semiconductor, glass optical fibre, system integration. Both are doing extremely well and I am very happy about it.

When you look at Vedanta over the next 20 years, do you see more diversification into the new economy and into newer areas, or will it fundamentally be a mining company?

I don't like diversifying much. But as you move forward, as and when the opportunity comes, we will see. But we like to have a strong capital allocation, and whatever opportunities come, we will see.

You've laid out a debt reduction plan at Vedanta Resources level. How is that panning out?

We are having a profit of $10 billion. We have very good dividend, and with that we are very comfortable about reducing the debt to $4 billion in three years.

You tried to, unsuccessfully as it turned out, to delist Vedanta in India. One, why did you want to do that? And two, will you try again at some point in the future?

Because there was too much noise about the debt, we tried delisting but people love our shares so much that some started crying, saying they had benefited from our dividends which we never stopped paying. I could see that we had given a very, very good offer, and many people tendered their shares. We have almost 71% holding in the company now and we are never going to look at delisting in future, and we are very happy with the holding.

But you are also accused of trying to delist at a decadal low of the share price. How do you respond to that?

Buybacks are a global trend. And people are not forced to sell. Yet, despite our intent, it's very difficult to make 100% people happy. I tell my employees all the time: you know it's impossible to make everybody happy, but our intention is always right.

What about talks of a potential merger between Vedanta and the parent company.

There is no such plan. Vedanta Ltd will be a main company, and Vedanta Resources will remain the parent company. Vedanta Resources will own 71% of this company.

You had troubles at Sterlite Copper, the factory shut down. What is the future for Sterlite Copper in the Thoothukudi plant?

The National Green Tribunal has done its investigation. The matter has been submitted to the Supreme Court, and we are waiting for the date of hearing. I'm looking forward to that because we can't afford to stop production, be it in Goa or elsewhere. I have no doubt once they have all the reports, factory will open.

Is it your argument that there were no environmental violations at the plant?

Not at all. We have the best plant there. We capture 100% sulfur, convert into sulphuric acid... Today, everybody has a source of livelihood there; hundreds of industries operate there and there is no question of doing anything that is not right.

Was Tamil Nadu pollution board, which flagged these violations, wrong?

No, they have never said the wrong thing. They have done what the court directed, and the National tribunal did all the survey.

There were protests and police firing and unfortunate loss of lives. How did you feel about that?

I felt terrible. It happened 10 miles away from our factory. There are vested interests. It is my personal desire to restart operations at the Tuticorin (Thoothukudi in Tamil Nadu) factory.

What is the succession plan at Vedanta?

What is the succession plan of prime minister Modi? It's the same with me. I'm in the chair, I'm in the saddle. I am running the company. I have said that this company is going to be a 500-year-old institution. We are very clear; management and ownership have to be separate. Today I have said 75% of wealth is going back to the society. As for my succession plan: the company will be run by a top professional. It will be run on the Tata Sons model....66% goes for the charity...and 30% with other people. This company is going to grow and will be one of the best companies in the world in natural resource and in technology for sure.

You're 68 now, how long more do you hope to continue marching ahead at the same pace?

As far as the pace is concerned, I will never put my boots up. Whether philanthropy or anything, whatever my passion is, I'll be there.

But you have no desire to relax or you know take it easy or none of that?

But I am more relaxed in my work. I always look at when Monday morning is coming. I still make a few calls and talk to people on Sunday because I enjoy my work.

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