Kausik Datta, ET Bureau
The ET jury chose Anil Agarwal, founder chairman of Vedanta Resources, as Business Leader of the Year mainly for his dogged pursuit of Cairn India, and its eventual acquisition against substantial odds. In a freewheeling chat with Kausik Datta, Agarwal spoke about how he got the idea of buying Cairn India, and more.
Excerpts:
You started your journey as an entrepreneur some 30 years ago. How has India changed as a business destination since then?
As one of the world's largest democracies, India has come a long way in the last 30 years. The economic and regulatory reforms introduced in the 90s led to the creation of many new business opportunities. We have moved up the value chain รข€” we are no longer the world's back office but their knowledge partners.
Full coverage: ET Awards for Corporate Excellence 2012
What are India's growth prospects?
After a period of slow growth, we have now started see increased policy reform and further liberalisation. A consistent effort in this direction will propel India into a higher growth trajectory. India has the potential to grow at a 10%. A right policy in this direction can lead to inclusive growth that will gradually eradicate poverty.
What are the changes needed in policy and policymakers' mindsets to help India grow?
We need a clear policy roadmap to accelerate development of domestic industry. Speedy approvals and predictable and stable policies will motivate domestic and overseas investors. Being a country rich in natural resources, we have a huge potential to reduce dependence on imports and ease the current account deficit (CAD). In fiscal 2011, 55% of India's imports comprised crude oil (30%), gold and silver (14%), iron & steel and metal-ferrous ores/products (5%), coal (4%), and fertilisers (2%). Exploration is the key, only 22% of our basins have even been moderately explored. Around 12% of our basins have not been explored at all.
The ET jury has chosen you as the business leader man of the year mainly because of your acquisition of Cairn India. How did the idea of buying Cairn occur to you?
I have always been enamoured by oil & gas. Memories of how India got elated when Indira Gandhi set up ONGC are still fresh in my mind. I was also fascinated by the value Dhirubhai Ambani created for his shareholders through Reliance. I have been watching how Cairn India taking shape. I even sought advice from two bankers on whether I should try to buy this company, although it was never up for sale. They forbade me. They said it was too big for me. But I had gone to Edinburgh and made a direct approach to Sir Bill Gammell (owner of Cairn). And the rest is history.
So, you went ahead with your instinct to buy Cairn India even after two bankers told you not to do so?
That's what we are. That's why we succeed.
What role will Cairn India play in the Vedanta Group?
Cairn is a great natural resource company and hence had a strategic fit with our existing portfolio. They operate around a fourth of India's oil production. We believe the oil & gas industry has attractive fundamentals. Additionally, we have expertise in managing natural resource assets, particularly in India. It is also a great platform for us on which to deploy our key skills of project delivery, and fast-tracking asset development. We believe that Vedanta can create significant value for the country by helping to accelerate growth at Cairn India. To date, our Rajasthan oilfield has helped reduce the value of oil imports by $10.5 billion and has contributed $3.5 billion cumulatively to the exchequer. The governments of Rajasthan and of India along with ONGC receive around 82% of net revenues through profit petroleum (the value of production after deducting costs that is divided amongst parties and government as per the production-sharing contract), cess and royalty. At 300,000 barrels per day, Rajasthan can reduce India's annual import bill by $10 billion annually and can contribute .Rs30,000 crore annually to the exchequer. In the first six months of this fiscal year alone, Cairn has contributed.Rs10,000 crore to the exchequer.
The ET jury chose Anil Agarwal, founder chairman of Vedanta Resources, as Business Leader of the Year mainly for his dogged pursuit of Cairn India, and its eventual acquisition against substantial odds. In a freewheeling chat with Kausik Datta, Agarwal spoke about how he got the idea of buying Cairn India, and more.
Excerpts:
You started your journey as an entrepreneur some 30 years ago. How has India changed as a business destination since then?
As one of the world's largest democracies, India has come a long way in the last 30 years. The economic and regulatory reforms introduced in the 90s led to the creation of many new business opportunities. We have moved up the value chain รข€” we are no longer the world's back office but their knowledge partners.
Full coverage: ET Awards for Corporate Excellence 2012
What are India's growth prospects?
After a period of slow growth, we have now started see increased policy reform and further liberalisation. A consistent effort in this direction will propel India into a higher growth trajectory. India has the potential to grow at a 10%. A right policy in this direction can lead to inclusive growth that will gradually eradicate poverty.
What are the changes needed in policy and policymakers' mindsets to help India grow?
We need a clear policy roadmap to accelerate development of domestic industry. Speedy approvals and predictable and stable policies will motivate domestic and overseas investors. Being a country rich in natural resources, we have a huge potential to reduce dependence on imports and ease the current account deficit (CAD). In fiscal 2011, 55% of India's imports comprised crude oil (30%), gold and silver (14%), iron & steel and metal-ferrous ores/products (5%), coal (4%), and fertilisers (2%). Exploration is the key, only 22% of our basins have even been moderately explored. Around 12% of our basins have not been explored at all.
The ET jury has chosen you as the business leader man of the year mainly because of your acquisition of Cairn India. How did the idea of buying Cairn occur to you?
I have always been enamoured by oil & gas. Memories of how India got elated when Indira Gandhi set up ONGC are still fresh in my mind. I was also fascinated by the value Dhirubhai Ambani created for his shareholders through Reliance. I have been watching how Cairn India taking shape. I even sought advice from two bankers on whether I should try to buy this company, although it was never up for sale. They forbade me. They said it was too big for me. But I had gone to Edinburgh and made a direct approach to Sir Bill Gammell (owner of Cairn). And the rest is history.
So, you went ahead with your instinct to buy Cairn India even after two bankers told you not to do so?
That's what we are. That's why we succeed.
What role will Cairn India play in the Vedanta Group?
Cairn is a great natural resource company and hence had a strategic fit with our existing portfolio. They operate around a fourth of India's oil production. We believe the oil & gas industry has attractive fundamentals. Additionally, we have expertise in managing natural resource assets, particularly in India. It is also a great platform for us on which to deploy our key skills of project delivery, and fast-tracking asset development. We believe that Vedanta can create significant value for the country by helping to accelerate growth at Cairn India. To date, our Rajasthan oilfield has helped reduce the value of oil imports by $10.5 billion and has contributed $3.5 billion cumulatively to the exchequer. The governments of Rajasthan and of India along with ONGC receive around 82% of net revenues through profit petroleum (the value of production after deducting costs that is divided amongst parties and government as per the production-sharing contract), cess and royalty. At 300,000 barrels per day, Rajasthan can reduce India's annual import bill by $10 billion annually and can contribute .Rs30,000 crore annually to the exchequer. In the first six months of this fiscal year alone, Cairn has contributed.Rs10,000 crore to the exchequer.
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