NRI billionaire Anil Agarwal-led Vedanta may take the inorganic route to enter India’s steel sector, the firm’s chief executive officer Tom Albanese said. “Acquisition is always an option,” he said, reminding one of the fact that Agarwal had built most of his business empire by taking over firms.
A source in the company had earlier told FE that Vedanta wants to set up a 5-million-tonne-per-annum (mtpa) steel plant in Karnataka, entailing around R30,000 crore as investment, along with a partner. Agarwal’s metal and mining conglomerate is already the country’s largest iron ore producer and producer of non-ferrous metals such as aluminium and zinc.
Agarwal had in 2010 announced the group’s plan to foray into steel-making in partnership with Larsen & Toubro by setting up a 5 mtpa plant at Palasponga in Odisha’s Keonjhar district in two phases and signed a memorandum of understanding with the state government. It had also acquired the assets of the under-construction Bellary Steel and Alloys (BSAL) in Karnataka for R220 crore by taking part in competitive bidding, way back in 2011.
Headquartered in Bangalore, BSAL had embarked on setting up an integrated 500,000 tpa steel plant and had lined up a plan to take it to 2 mtpa. It however, could not complete the project and ran into debt. While the plant at Bellary is on the cards, Vedanta is also keen to acquire existing steel plants to be a major player in the field. There are many such assets in the country that could potentially interest him.
“Vedanta has a strong iron ore business and also a very strong and innovative value-added business in Goa. I do think that there is tremendous iron ore resource in India. There will be higher demand for steel in India. We will keep our eyes open for opportunities for adding to our value-added business beyond the current facility in Goa as and when opportunities present themselves to us,” Albanese said. Iron ore is one of the key raw materials for steel-making and having captive mines always helps a company to remain competitive.
The immediate target, Albanese said, would be to ensure that the company’s iron ore business and the existing value-add business remain strong.
“We are trying to look around, envision the time when urbanisation picks up in India, when you see more government spending on infrastructure, higher expenditure by Indian families demanding higher quality household items and more manufacturing capacity developing in India. We keep our options to be in a position of strength in India’s aluminium, copper, oil and possibly steel industries,” he said.
India’s steel capacity currently stands at around 118 mtpa and the government targets to take it to 300 mtpa by 2030.