1.VEDANTA RESOURCES PLC IS A LONDON

8/7/2019 1.VEDANTA RESOURCES PLC IS A LONDON

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PRESENTED BY:-

NAME ROLL No.

DHARMESH CHANDRA 08

ERUM AFREEN KHAN 24

NISHIL LALAN 26

ROSHAN PARIDA 37

NIRALI SHAH 48

CLASS: - T.Y.B.F.MSUBJECT: - GLOBAL CAPITAL MARKETS

TOPIC: - VEDANTA BALCO

COLLEGE: - S.K SOMAIYA COLLEGE OF ARTS, SCIENCE &

COMMERCE.

ASSIGNED BY:-

PROFESSOR: - ARVIND IYER


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ACKNOWLEDGMENT

First we thank our faculty for their continuoussupport in our course. They are always there to listen and

to give advice. They are responsible for involving us indoing presentations in the first place. They taught us howto ask question and express our ideas. They showed us

different ways to approach a research problem and needto persistent to accomplish our goal.

Special thanks go to our PROF.ARVIND IYER, whois most responsible for helping us to complete this project

as well as the challenging research that lies behind it.Without his encouragement and constant guidance, we

could not have finished this project.Last but not the least, we thank our family, our

parents for giving us life in the first place for educating uswith aspects from both arts & sciences for unconditional

support and encouragement to pursue our interests, evenwhen the interest went beyond boundaries.

We have something interesting to say, for reminding usthat our research should always be useful and serve good

purposes for all humankind.


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VEDANTA RESOURCES

VEDANTA RESOURCES PLC IS A LONDON-BASED DIVERSIFIED FTSE 100METALS AND MINING GROUP, WITH EXTENSIVE INTERESTS IN ALUMINIUM,COPPER, ZINC AND LEAD, IRON ORE AND COMMERCIAL ENERGY. THECOMPANY CURRENTLY OPERATES IN INDIA, ZAMBIA AND AUSTRALIA. With atalent pool of over 29,000 employees globally, Vedantas focus is clear andcommitted. Vedanta was the first Indian company to be listed on theLondon Stock Exchange in December 2003. Vedantas Indian subsidiary,Sterlite Industries India Limited (Sterlite) also achieved a successful USlisting on the New York Stock Exchange in June 2007, raising $2.0 billion.

Vedantas 2008 revenues were $8.2 billion, demonstrating a five-yearcompounded annual growth rate (CAGR) of 53.5% with 2008 EBITDA at$3.0 billion or five year CAGR of 68.1%. The Groups 2008 profits after taxof $2.0 billion grew at 103.2% on a compounded basis over the last fiveyears. For 2008 our operating costs were $5698.1 million which includes

employee compensation of $344.7 million. Tax holidays and similarexemptions of $160.6 million were received, while donations of $3.5 millionwere made during 2008 (EC1, EC4).

Vedantas principal operating companies comprise Hindustan ZincLimited (HZL) for its fully integrated zinc and lead operations; Sterlite andCopper Mines of Tasmania Pty Limited (CMT) for its copper operations inIndia/Australia; Konkola Copper Mines plc (KCM) for its fully integratedZambian copper operations; and Bharat Aluminium Company (BALCO),Madras Aluminium Company (MALCO); Vedanta Aluminium Limited (VAL)for its aluminium and alumina operations; Sterlite Energy Limited (SEL) for

its commercial power generation business and Sesa Goa Limited (SESA),for its iron ore business.

To take advantage of the growth and development in Indias electricitysector, Vedanta has entered the commercial power generation business.The Group is currently implementing a 2,400 MW commercial energyproject at Jharsuguda, Orissa at an estimated cost of $1.9 billion. The power


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business will be operated through SEL, a wholly owned subsidiary ofSterlite.

In the last five years, the Group has grown production capacitiesbetween 3-7 times in each of its primary metals. The Group currently has a

production capacity of 754,000 tonnes in zinc and lead, 650,000 tonnes incopper, 400,000 tonnes in aluminium and over 12 million tonnes in iron ore.It has a clear roadmap of becoming a milliontonne per annum producer atthe lowest decile costs in aluminium, copper and zinc as well as becoming a25 million tonne producer of iron ore within the next 2-3 years. Vedanta hasundertaken several green field and brown field expansion projects toachieve this.

Vedanta has continually demonstrated its ability to deliver major valuecreating projects, offering unparalleled growth at lowest costs andgenerating superior financial returns for its shareholders. The capital

expansions completed under the first phase of expansion, entailing aninvestment of $2.2 billion, involved highly energy efficient and environmentfriendly technologies. These were completed at costs significantly lowerthan international benchmarks and in record periods. The next phase of theexpansion pipeline has an investment of over $6.5 billion and is nowunderway.

Vedanta develops and manages a diverse portfolio of mining andmetals businesses whilst carrying out its activities in a socially andenvironmentally responsible manner. The management of environment,employees, health and safety and community issues, in respect of its

operations is central to the success of the companys business.

VED DETAILS

Vedanta Resources plc operates as a diversified metals and miningcompany in India, Zambia, and Australia. The company primarily producesaluminum, copper, zinc, lead, and iron ore. It involves in bauxite mining,alumina refining, aluminum smelting, smelting and refining of copper, zinc-lead mining and smelting, and an iron ore mine operations in India. Thecompany also involves in copper ore mining in Australia; and an integrated

copper production operation in Zambia. In addition, it operates a coal basedindependent thermal power plant in Jharsuguda, India. Vedanta Resourcesplc was founded in 1976 and is headquartered in London, the UnitedKingdom.

Vedanta Resources plc


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Vedanta Resources plc is a diversified metals and mining companywith revenues in excess of US$6 billion. We are proud to be the first Indianmanufacturing company to be listed on the London Stock Exchange.

Our experienced workforce of over 30,000 people is distributed amongour operating locations in India, Zambia and Australia. The principalmembers of our consolidated group of companies are as follows:

COPPER BUSINESSSterlite Industries (India) Ltd. Sterlite is headquartered in Mumbai.

Sterlite has been a public listed company in India since 1988, and its equityshares are listed and traded on the NSE and the BSE, and are also listed andtraded on the NYSE in the form of ADSs. Vedanta owns 53.9% of Sterlite andhave management control of the company.Konkola Copper Mines. We own 79.4% of KCMs share capital and havemanagement control of the company. KCMs other shareholder is ZCCMInvestment Holdings Plc. The Government of Zambia has a controlling stakein ZCCM Investment Holdings Plc.Copper Mines of Tasmania Pty Ltd. CMT is headquartered in

Queenstown, Tasmania. Sterlite owns 100.0% of CMT and has managementcontrol of the company.

ZINC BUSINESSHindustan Zinc Limited. HZL is headquartered in Udaipur in the State ofRajasthan. HZLs equity shares are listed and traded on the NSE and BSE.
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Sterlite owns 64.9% of the share capital in HZL and has managementcontrol. Sterlite has a call option to acquire the Government of Indiasremaining ownership interest.

ALUMINIUM BUSINESSBharat Aluminium Company Ltd. BALCO is headquartered at Korba inthe State of Chhattisgarh. Sterlite owns 51.0% of the share capital of BALCOand has management control of the company. The Government of Indiaowns the remaining 49.0%. Sterlite exercised an option to acquire theGovernment of Indias remaining ownership interest in BALCO in March2004.Vedanta Aluminium Ltd. Vedanta Aluminium is headquartered in

Lanjigarh, State of Orissa. Vedanta owns 70.5% of the share capital ofVedanta Aluminium and Sterlite owns the remaining 29.5% share capital ofVedanta Aluminium.

IRON ORE BUSINESSSesa Goa Limited. Sesa Goa is headquartered in Panaji, India, and itsequity shares are listed and traded on the NSE and BSE. We own 57.1% ofSesa and have management control of the company.

COMMERCIAL POWER GENERATION BUSINESSSterlite Energy Limited. Sterlite Energy is headquartered in Mumbai.Sterlite owns 100.0% of Sterlite Energy and has management control of thecompany.Madras Aluminium Company Ltd. MALCO is headquartered in Mettur,India. MALCOs equity shares are listed and traded on the NSE and BSE. Weown 93.9% of MALCOs share capital and have management control of thecompany.


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Bharat Aluminium Company Ltd. (BALCO) has been closelyassociated with the Indian aluminium industry, playing a pivotal role inmaking aluminium a leading metal with myriad uses ranging fromhousehold and industrial requirements to aerospace applications. BALCO ispart ofVedanta Resources, a London listed metals and mining major withAluminium, Copper and Zinc operations in UK, India and Australia.

The Vedanta threat increases

As predicted by website in January Vedanta, the new mining company

launched with such clamour last year on London's Stock Exchange, isn't

letting the grass grow under its feet (or that of many other people). This

week, the company's chief architect, Anil Agarwal of Sterlite Industries,announced that, Vedanta/Sterlite is to up the capacity of its planned Orissa

alumina refinery by another 40,000 tonnes per year, in the teeth of growing

opposition from local people and human rights activists.

Even while the Indian Supreme Court debates whether or not it was

legal for Sterlite to take over formerly government-owned Hindustan Zinc

five years ago, Agarwal now threatens to bid for the 49% he doesn't yet

own of Balco - the other publicly-owned minerals company which Sterlite

came to control at around the same time.

Meanwhile Vedanta's London-based financial officer announces that

the company intends to increase its holding of Sterlite to 75%, so long as it

can raise new funds.This is despite the fact that Vedanta's share price fell

11% in late January, when US investment bank Morgan Stanley warned that

Vedanta was over-reaching itself.
http://www.vedantaresources.com/http://www.vedantaresources.com/


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Vedanta to consolidate India operations

Vedanta Resources, which was the first primary listing by an Indian

company on the London Stock Exchange (LSE) in December 2003, has

chalked out a strategy to consolidate its position in the Indian metals

industry.

VR's capital programme involves investment of $2 billion in India and

according to Brian Gilbertson, non-executive director and Chairman,

Vedanta Resources, the $ 870 million raised offshore, will be brought back

and invested here. Vedanta will also be appointing one or two non-

executive directors this week.

Essentially, Vedanta has controlling interests in Sterlite, Orissa

Alumina, Malco, Hindustan Zinc and Balco. Vedanta acquired 5 per cent of

Sterlite's equity in January taking its holding to 65.8 per cent. Sterlite also

announced $350 million rights issue in December 2003.

According to Anil Agarwal, CEO and Managing Director, VR, "the

company is positioned to meet metal demand in India. In zinc, through

Vedanta-Hindustan Zinc, we have 62 per cent of the market and are the

only integrated player, in copper, through Sterlite, we have 42 per cent ofthe market and are one of two players and in aluminium, through Balco and

Malco, we have 21 per cent of the market and are one of three players.''

In zinc, the company is planning a $320 million expansion from the

current 2.10 lakh tpa [210,000 tonnes per year] four lakh [400,000] tpa zinc

ingots by January 2006. In copper, the company has a 1.80 lakh tpa of

copper anode and cathode and 1.40 lakh tpa copper rods and is expanding

the anode and cathode capacity to three lakh tpa by June at a cost of $80

million.

In aluminium, it has a 135,000 tonne capacity and is adding a 2.50

lakh brownfield aluminium smelter and power plant at the cost of $800

million to be ready by January 2006. The company is also setting up a 1.4

million tpa alumina refinery and a 85-125 MW captive power plant at a cost

of $800 million.


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The company's strategy revolves around optimising the asset base by

de-bottlenecking plants, expanding capacities and driving down unit costs.

Also, the completion of the two major projects for the 2.50 lakh aluminium

smelter at Korba in Orissa and entry into the alumina market through the

1.4 million tpa refinery. Mr. Gilbertson said half of the output would be used

captively and the other could be supplied to consumers.

Third, the company will go in for increasing shareholder value by

using IPO (International Public Offering) proceeds for growth, consolidate

Hindustan Zinc and Balco ownership and offer a medium term exchange

offer for Sterlite shareholders.

The company is also looking at growth opportunities inside and

outside India. Regarding the exchange offer, Mr. Gilbertson said in future,

VR and Sterlite could see a consolidated shareholder base. Regarding

opportunities, Mr. Gilbertson said, "Further privatisations would be in thefrontline. Nalco privatisation is unlikely to happen soon. Orissa is a mineral-

rich state and we could see other opportunities in areas like even Iron ore

mining."

Sterlite may buy govt's 49% stake in Balco

Sterlite Industries is looking at buying Bharat Aluminium Company

from the government. Sterlite, which controls 51 per cent in the aluminiummajor, has a call option for the residual 49 per cent stake, which can be

exercised after March 1.

Sterlite chairman Anil Agarwal told Business Standard, "We are

planning to put forth a proposal to the Sterlite board on this issue as we are

inclined to increase our stake in the company. However, no final decision

has yet been taken. At the moment, we are in the process of evaluating

various options."

Sterlite had acquired 51 per cent stake in Balco from the governmentin 2001 at a consideration of Rs 551.5 crore (Rs 5.51 billion).The company

had yet not decided on the method of raising funds for picking up the

remaining stake in Balco, Agarwal said.

Sterlite has also lined up expansion plans for Balco. It is planning to

invest around $800 million for the expansion project.The existing one lakh


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tonne capacity at Balco's Korba smelter will stand enhanced to 350,000

tonne by March 2006.

Sterlite is also planning to set up a 1.4 million tonne alumina refining

unit in Orissa. "We are looking at using 50 per cent of the alumina produced

at the Orissa refinery for captive purposes. The alumina will be used for theexpanded capacity at Balco's Korba smelter," Agarwal said.

The combined domestic market share of Balco and Madras Aluminium

Company in which Sterlite holds an 80 per cent stake, is almost 21 per cent

of aluminium sales.Vedanta Resources, which holds around 60 per cent in

Sterlite, has recently raised $1 billion at the London Stock Exchange

through an initial public offering.

The proceeds from the IPO will be used to fund Sterlite's expansion

projects in group companies Balco, and Hindustan Zinc.

Vedanta plans to hike Sterlite stake to 75%

Vedanta Resources, the holding company of Sterlite Industries, is

planning to increase its stake in the company to 75 per cent from its current

holding of 65 per cent.

Peter Sydney Smith, CFO, Vedanta, said: "We are looking at bringing

in more funds into Sterlite. We are considering the option of increasing our

stake in Sterlite to the permissible 75 per cent. We may try to bring in the

funds through loans or through external commercial borrowings as well."

Vedanta has recently hiked its stake in Sterlite to 60 per cent from

55.1 per cent by purchasing 4.98 per cent shares from the market. The

acquisition had raised Vedanta's stake in Sterlite to 65.8 per cent owing to

the additional 5 per cent stake that it owns in Sterlite, through its 80 per

cent subsidiary Madras Aluminium Company. Madras Aluminium holds 7 per

cent in Sterlite."About 50 per cent of the total proceeds of the Vedanta IPO have

already come in to Sterlite. We are looking at bringing in some more funds

in the near future," Smith added. Vedanta Resources raised $1 billion at the

London Stock Exchange at pounds 3.9 a share.


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Sterlite had also come out with a 3:10 rights issue in December 2003,

which will rake in Rs 1,400 crore. The company had come out with a rights

issue to transfer the funds from Vedanta into Sterlite. Sterlite has slated an

investment of $2 billion for its expansion projects in its group firms Balco

and Hindustan Zinc.

The company will be investing $800 million for the expansion at Balco

to take the installed capacity to 3.5 lakh tonne a year and another $800

million for setting up an alumina refinery in Orissa with 1.4 million tonne

Vedanta plans aluminium plants in Orissa Times of India, February 25

2004.UK- based Vedanta PLC, the holding company of Sterlite Industries,

would invest about $1600 million to set up a 2.5 lakh tonnes per annum

aluminium smelter at Korba and 1.4 mtpa alumina refinary in Orissa. The

group is considering to bid along with other investors for Nalco when the

PSU (Public Service Unit) comes up on the disenvestment block.

" We would invest about $ 800 million each in the Korba and Orrisa

projects as part of our growth strategy for 2-3 years" Vedanta's non-

executive chairman Brian Gilbertson told reporters. The Orissa project,

which includes bauxite mining, and the establishment of of a 1.4 mtpa

alumina refinary and 85-125 mw captive power plant would be

commissioned by March 31, 2007, he said, adding that half of the alumina

production in the project would be utilized internally. The company founded

by Anil Agarwal, would add about 2.5 lakh mta aluminium to the present

smelter capacity of 1.35 mtpa and a power plant and would also spend

$350 million for expansion to touch 4 lakh tonnes zinc ingot capacity.

Gilbertson said that the company was interested in Nalco and would

consider partnering with other players to jointly bid for it.

Vedanta may offer swap to Sterlite

shareholders

Indian investors may soon be able to own shares of Vedanta

Resources Plc, the LSE-listed holding company of the $981-million Sterlite

group.

The mining and metals major is planning a medium-term exchange of

Sterlite shares listed on Indian stock exchanges with that of Vedanta, which

recently collected about $1 billion through a global IPO, Mr Brian Gilbertson,

Chairman of Vedanta Resources, told newspersons here.


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Mr Gilbertson said that the company was working on how its

ownership could be offered to Indian investors. He said they could be given

a choice of holding Vedanta shares in exchange of equity holding in Sterlite

Industries that also owns controlling equity stakes in Hindustan Zinc, Balco

and the 1.4-mtpa alumina project in Orissa. Vedanta shares should be more

valuable because it also owns the other assets of the group such as Malco.

A company official told Business Line that the exchange could be

either through an issue of Indian Depository Receipts or by a simple swap of

Sterlite shares with those of Vedanta. Even though the Government has in-

principle approved issue of IDRs by foreign companies, a regulatory

framework for it is yet to be put in place. Similarly, even though the

Government has allowed Indians to invest in listed foreign companies that

have a listed Indian subsidiary, it is yet to issue clear guidelines for such

investments."We would do it as soon as there is regulatory clarity on IDRs or the

international swap," the official said. Meanwhile, Sterlite has just completed

a one-for-one share bonus issue and a three-for-10 rights is underway. The

price of the issue has yet to be announced but Vedanta had earlier said that

it would use funds it raised through the IPO to subscribe to the rights.

Vedanta debuted on the London Stock Exchange in December at a

price of 3.9 per share but currently trades at about 3.6 a share. Even

though the global IPO of the company was oversubscribed five times, it

could manage a price only towards the lower end of the book-building band.

The share has never really recovered from the lows that it touched

immediately after listing.

Mr Gilbertson said the share price was depressed after the Indian

Government slashed duties helping imports to compete with domestic

products. Litigation against the Government's privatisation programme also

affected Vedanta shares. He, however, insisted that overseas investors

were yet bullish on the `India story', especially about the prospects of the

mining and minerals industry.

Vedanta may spin off aluminium projectVedanta Resources the mining major owned by London-based

tycoon Anil Agarwal is likely to demerge a large aluminium project in


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Orissa into a separate entity to help the conglomerate get a better

valuation for the aluminium business.

London-listed Vedanta has hired Morgan Stanley, Credit Suisse and JP

Morgan Cazenove to put together a plan that would result if approved byshareholders and creditors in Vedanta Aluminium, the subsidiary which

has operations in Orissa, being listed on NSE and BSE. Bharat Aluminium, or

Balco, another aluminium company in the Vedanta fold, is not part of this

plan, since the government owns 49% of it, said people familiar with the

development. This is the second major corporate restructuring proposal that

Vedanta has planned in two years. It had to go back on the earlier proposal

a complicated plan which proposed the unbundling of its aluminium, zinc,

copper and mining businesses due to the liquidity crisis and opposition

from institutional shareholders. Vedanta Resources declined to comment for

this story.

The people familiar with the matter said Vedanta wanted to make its

Indian business which are currently consolidated under Sterlite Industries

which directly makes copper and holds stakes in companies smelting

aluminium and zinc easier for investors to understand. If the plan is

approved by shareholders and regulators, Sterlite will end up as primarily a

maker of copper, zinc and lead while the bulk of the aluminium business will

be with the new listed company, Vedanta Aluminium.

Vedanta Aluminium is 70% owned by Vedanta Resources and the rest

is with Sterlite Industries.The details of the listing plan are not available, but

logically there are three ways in which Vedanta Aluminium can be listed.

The company could list through an initial public offer, or IPO, in which new

shares would be issued, or the owners could divest their stake. The third

option is to issue new shares to existing shareholders of Sterlite on a

proportionate basis by valuing the contribution of the aluminium business.

Shareholders, other than the owners, have to own 10% in all listed Indian

companies, and that number will go up to 25% in the new fiscal startingApril 1.

Apart from shareholder approval, the demerger proposal would also

require clearance from a high court, which could take about three

months.The demerger proposal comes at a time when Vedanta Aluminiums

mining project in Niyamgiri in Orissa has come under regulatory glare for


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alleged environmental and human rights transgressions with organisations,

such as the UK-based Amnesty International and Survival, alleging that the

company hasnt involved the local populace in the project, despite the fact

that the project could displace them.

This narrative popular among sections of non-governmental

organisations, or NGOs, has been strongly denied by both Vedanta and

the Orissa government. Both say that the mining project, currently

undertaken jointly by Vedanta and the state government-owned Orissa

Mining Corporation, has not violated any Act.

The demerger proposal for Vedanta Aluminium doesnt include Bharat

Aluminium, or Balco, as the Indian government owns 49% in it. Sterlite

acquired a 51% stake in Balco through a divestment programme in 2001.

Any consolidation of Balco into the new aluminium business would happen

only if the government sells its stake. Sterlite and the government have so

far not been able to agree on a price.

While Balco makes about 350,000 tonne of aluminium at its smelter in

Korba, Vedanta Aluminium plans to put together an integrated aluminium

operation in Orissa which would consist of a 1.75-million-tonne aluminium

smelter at Jharsuguda, 5-million-tonne alumina refinery that will convert the

bauxite proposed to be mined at Niyamgiri into alumina and a captive

power plant of 1,215 megawatts, as the entire conversion process is donethrough electricity.

On completion, Vedanta Aluminium, along with Balco, will catapult the

Vedanta Group into the worlds fourth-largest aluminium player, behind

Rusal of Russia, Alcoa of US and Chalco of China.The valuations for Vedanta

Aluminium, once the Orissa project is complete, could touch $20 billion,

based on the low cost of production, said analysts. Currently, since Vedanta

Aluminium buys alumina the main raw material for making aluminium

from outside, its cost of production is $1,400 per tonne, which could fall toabout $1,000 per tonne, once the Niyamgiri mining project takes off.

Globally, the lowest cost of production at $1,300 per tonne is that

of Chinas Chalco.But it is far from clear if Vedanta will get a mining licence

in Niyamgiri anytime in the near future or ever. On Friday, the


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governments forest advisory committee, or FAC, submitted a lengthy

report on the Vedanta project.

While the project found no major violations of environmental norms, it

said the local tribal population, which is classified as a primitive tribalgroup, were in no position to benefit from the project. Further, the report

calls for the proper implementation of a central Act called the Forest

Produce Act in Niyamgiri. The environment ministry is likely to refer this

to the tribal affairs ministry.

We want higher prices for BALCO, HZLresidual stake: Handique

The government will sell its residual stake in metal firms BALCO andHZL for a much higher price as the strategic sale of equity in thesecompanies was done in "haste", Mines Minister BK Handique said onSunday.

"Disinvestment in Balco and Hindustan Zinc (HZL) was done in haste. Ipersonally feel it needs to be more priced," he said PTI on the issue of saleof the government's stake in the erstwhile PSUs. The NDA government hadsold the majority stake in Bharat Aluminimum Company (Balco) in 2001. Italso divested 45 per cent in Hindustan Zinc Ltd in two tranches to strategicpartner Sterlite group. Sterlite acquired additional 20 per cent shares of HZL

from the market by way of open offer, taking its stake in the firm to about65 per cent.

It is now looking to purchase the remaining stake in the twoentities. The government has not ceded to the proposal of Sterlite and thematter is before arbitration in the Balco case. In Balco, the government stillhas a 49 per cent stake, while in HZL, it has about 29 per cent.

Handique said that internal assessment for pricing of the remaining 49per cent stake in BALCO is "very difficult" as the company is not listed onthe stock exchange, but it is being done. "Very difficult to say. It is not

listed. It (internal assessment) is being done," Handique said, exudingconfidence that it will get a good price for Balco this time. "We expect to geta good price," he said.

NRI billionaire Anil Agarwal-led Vedanta Group's Sterlite Industries hadbought a 51 per cent stake in Balco and 64 per cent in Hindustan Zinc for Rs551 crore and over Rs 750 crore respectively. However, the matter ofbuying the residual stake in Balco has been stuck in arbitration for a long


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time now. A final hearing is expected by August this year.

Handique said the matter of Hindustan Zinc was a "similar case"too. The acquisition of the residual equity in the two companies is crucial forVedanta's overall corporate restructuring programme and continuing its

thrust on Indian operations, the mining major had last month expressedhope to buy the government's remaining stake by the end of this fiscal.

"We have already made provisions in the accounts of Hindustan Zincand Balco. We believe this year we can have the mandate of minoritybuyouts of Hindustan Zinc and Balco," Vedanta Chief Anil Agarwal hadsaid. Vedanta Resources had a total revenue of USD 7.93 billion in the fiscalyear ended March 31, up 21 per cent from FY'09.

BALCO to have world's largestaluminium plant

Vedanta Resources plc, a London-based mining and metal major, will

set up a 650,000 tonnes per annum (tpa) smelter plant in its Bharat

Aluminium Company Limited (BALCO) facility located in Korba district of

Chhattisgarh, an official said on Tuesday. The company will sign a

memorandum of understanding (MoU) with the state government on

Wednesday to set up another smelter plant in the BALCO complex in Korba,

about 200 km from Raipur, the official said. On completion of the project,

the production output of BALCO will go up from 135,000 tpa to 1,000,000

tpa. As of now, no company in the world produces 1 million tpa aluminium

from a single location.

In 2001, Vedanta Resources plc took over the management control of

BALCO, formerly owned 100 per cent by the government of India, after the

then National Democratic Alliance (NDA) government divested 51 per cent

equity and management control in favour of the then Sterlite Industries (I)

Limited (now Vedanta Resources).The company went for a major expansion drive and recently increased

the total aluminium output from 135,000 tpa to 350,000 tpa in the existing

plant. The new smelter plant, to be set up at an estimated cost of Rs 80

billion, is also part of the same drive. (IANS)


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The farmers whose land was taken were promised huge compensation

but were left at the mercy of private contractors. Not only did the farmers

lose their land and their houses, but they were also forced to live in small

camps or rented houses.

In 2003 Sterlite Company cheated the government crores of rupees in

taxes and got caught. The person who took up their legal case was PC

Chidambaram, who is currently the home Minster of India, and a lawyer by

profession. Chidambaram was also a member on the board of directors of

Vedanta Company for a while.

The forests of Chattisgarh which contain these mineral deposits arealso home to lakhs of Adivasi or indigenous people who are variously called

Koli, Munda, etc. Even though sixty three years have lapsed to our countrys

freedom, no government till this date has provided these Adivasis with even

basic amenities like education, roads, ration cards, etc

The condition in the areas where Adivasis reside is so miserable that

hardly many of the people there cross the age of 40 years. In this short

lifespan they have to survive on the forests whatever little the Mother

Nature can offer them.

The Vedanta Company could not start mining for the precious deposits

without driving the hapless Adivasis out of the forests. The government

made some devious plans to force them out and in the beginning, the

Advasis refused to move out but later protested. Government sent in the

armed forces and the Adivasis left their villages and ran into the forests.

The government created a peoples army called Salwa Judum, which

burnt down villages, beat up children and men and raped women. When

harassment by the government continued, the Adivasis had no option left

but to rally behind the Naxalites and take up an armed struggle.


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Naturally, the government could not tolerate this and that is why it

started sending thousands of CRPFs to wage a war against those Adivasis

who are, incidentally, as much Indian as any Aryans and the Dravidians who

are sitting in the mandarins of power in New Delhi.

The former lawyer of the Vedanta Company and now the honorable

Home minister of this country has recently threatened: I dont care how

many men I lose, I will win this war. He is saying this perhaps because he

wants to finish off the Adivasis so that Vedanta can start mining in those

forests.

Just like they catch the Muslim boys on the suspicion of being Jehadisin any communally sensitive part of the country, the Chattisgarh

government has imprisoned many tribal boys of young age because it

thinks they are a threat to the security of this country.

This is the way the national security is being handled in this country.

It is with this mindset the power wielders of this nation want to deal with the

problem of social unrest, hunger, deprivation and marginalization.

Now, a few words about the Maoists who are revolutionaries mainly

consisting of the extremely poor people including a large number of Dalits

and Adivasis. They come mainly from the toiling masses and they are trying

to organize the vast population of such masses against those who try to

impinge on their right to life and liberty. They seek to arm and train them so

that these masses can resist the onslaught of the rich and powerful who are

intruding into their land.

In this effort the Maoist go beyond the idea that mass movements

should focus on some specific issues like increase of wages, better health

care, more honesty of public servants and so forth. The view of the rebels is


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against such oppression is being construed as rebellion and they are being

treated on par with the terrorists.

Its unfortunate, that one hand India is extolled for being the largest

democracy, on the other hand no one no one is talking about the injustice

thats committed by the democratically elected government of this land.

The government which is responsible for creating the Maoists

problems is bent on using its strong arm tactics to tackle the problem as if

unaware of the fact that one can lord over with the bayonet of the gun but

cant sit on it.

Stake in Balco, Hindustan Zinc

The government now holds 49% stake in Balco and 29.5% in HZL. Thebalance of HZLs equity is held by the public. Metal and mining majorVedanta Resources hopes to buy out the governments minority equity in itsgroup firms Balco and Hindustan Zinc (HZL) in the next three to fourmonths, a top company official said.

The government now holds 49% stake in Balco and 29.5% in HZL. Thebalance of HZLs equity is held by the public.As far as our call options are

concerned, in case of Balco we are currently in arbitration, a couple ofarbitration meetings have taken place, and hopefully we believe that basedon the arbitration proceedings, we should see a successful closure of this inthe next three to four months, Vedanta Resources vice-chairman NaveenAgarwal said.

Speaking at an analysts call conference after the announcement ofthe first quarter results of Vedantas flag- ship firm Sterlite Industries,Agarwal said he hoped the company would be able to also acquire theminority stake of the government in Hindustan Zinc by the end of this year.

We continue to be engaged with the government on this matter andwe believe that in view of the current environment on disinvestment, (the

company) should see the closure during the current year, he added. Duringthe tenure of NDA government, the NRI billionaire Anil Agarwal-led firm hadbought 51% stake in Bharat Aluminium Company (Balco) for Rs551 croreand 64% in Hindustan Zinc (HZL) for over Rs750 crore.

Sterlite Industries was slated to exercise its call option to acquire theresidual stake in Balco in 2004. The controller and auditor general valuedthe residual stake much higher and the then attorney general even termedthe mining firms call option as illegal. The issue of residual equity in Balco


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If you compare India to other countries, such as Australia, onenvironmental benchmarks, Indias performance is abysmal, Vohra said.Ensuring environmental compliance is costly and the process needs to betransparent, which lacks in India and given the increasing importance of theenvironment, there are bound to be rejections.

Balcos Suri put it somewhat differently. Definitely the way we haveto go through the clearances in India is long drawn and tedious, hecomplained. There is no single window clearance. We hope it will improvewith liberalization, so that so much time is not wasted. First, we have to getenvironmental clearances from state and then the Centre, then landacquisition and then rehabilitation. We have one-fifth of the worlds bestbauxite reserves but produce only 3% of worlds aluminium.AnotherVedanta affiliate also ran into unrelated legal and environmental issues in2007.

Central Electricity Authority to seekreport from Balco

Balcos CEO blames heavy rains, lightning for the chimney collapse atits project in Korba; says details will be known after inquiry. The CentralElectricity Authority (CEA) will ask Vedanta Resources Plc-controlled BharatAluminium Co. Ltd (Balco) to submit a report on the chimney collapse at itsproject in Korba, Chhattisgarh.

The accident on Wednesday has so far claimed 18 lives, according to aBalco statement.Chinese power generation equipment maker ShandongElectric Power Construction Corp. (Sepco) was awarded the engineering,procurement and construction contract for the 1,200MW power project.Sepco had, in turn, outsourced the chimney construction work to New Delhi-based Gannon Dunkerley and Co. Ltd.

This is a private sector project and we will ask for a report fromBalco, said Rakesh Nath, chairman, CEA, Indias apex power sectorplanning body. Balcos chief executive Gunjan Gupta blamed heavy rains

and lightning at Korba but said in the statement that the specific reasonsfor this incident would be known only after an inquiry.

It was unclear if any of those missing were still alive after theWednesday accident. Rescuers are using cranes and saws to clear themound of rubble consisting of big chunks of concrete slabs and twistedsteel, said Vishwa Ranjan, director general of police in Chhattisgarh.


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The CEA decision on Thursday follows a judicial inquiry ordered byChhattisgarh chief minister Raman Singh, who has also asked for filing afirst information report with the police against the Balco management.Questions emailed to billionaire Anil Agarwals Vedanta Resources, Sepcoand Gannon Dunkerley on Thursday remained unanswered.

Questions have been already asked about Chinese power generationequipment manufacturers in India. Mint reported on 16 October about a CEAaudit of Chinese equipment, raising questions about the operation andmaintenance of such equipment, the lack of a quality plan and theinsufficient number of Chinese engineers at site locations.

Several Indian power project developers have placed orders withChinese firms such as Dongfang Electric Corp. Ltd, Shanghai Electric PowerCo. Ltd and Harbin Power Equipment Co. Ltd, on account of the inability oflocal manufacturers to meet growing demand for equipment in India.

The CEA survey was conducted at the behest of state-owned BharatHeavy Electricals Ltd, which competes with Chinese firms.Some powerplants that have used Chinese equipment have run into trouble. Forinstance, a turbine supplied by Dongfang Electric for the West BengalPower Development Corp. Ltds 300MW Sagardighi project failed.

However, analysts dont agree with these concerns. I do not see thisdevelopment as a threat to Chinese equipment manufacturers. We ratherneed the Chinese till we ramp up domestic manufacturing capacities, saidMadanagopal R., an equity research analyst at Mumbai-based Centrum

Broking Pvt. Ltd.

Moodys reviews Vedantas ratings forpossible downgrade

The review follows the companys announcement that it would morethan double its aluminium capacity with an overall cost of $9.8 billion.Moodys Investors Service has placed the Baa3 corporate family rating andthe Ba1 long-term senior unsecured rating of Vedanta Resources plc(Vedanta) on review for possible downgrade.

The review follows the companys announcement that it would morethan double its aluminium capacity with an overall cost of $9.8 billion. Therating action reflects Moodys concern that such capital investment wouldweaken Vedanta within its ratings depending on the additional debt to beraised, combined with material project execution risks says Ivan Palacios, aMoodys AVP/Analyst.


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The rating agency also notes Vedantas additional capital requirementin relation to the recently-announced acquisition of Asarco, the plannedbuy-out of minority stakes in Hindustan Zinc Ltd and Balco, and theconstruction of substantial power generation capacity.Accordingly, totalcapital investment requirement over the next 4 years is pegged at around

$18 billion.

Restructuring plans

Vedanta also announced a plan to simplify its corporate structurewhich will see the company increase its direct shareholding in SterliteIndustries Ltd from 57% to 73%.Moodys sees the simplification of thecorporate structure as a positive step, albeit it remains relatively complex,as Vedanta will not fully own all of its operating subsidiaries.

Vedanta set for smart entry' intopetroleum sector

Going by its track record of acquisitions in India, Vedanta ResourcesPlc could possibly acquire majority stake in Cairn India. If Vedanta does gofor a majority acquisition, analysts feel it may trigger an open offer.

Terming the latest move as a smart entry' into oil and gas sector, MrGokul Chaudhri of BMR & Associates said Vedanta has built its businessthrough brownfield acquisitions. Besides, the metal and mining giantunderstands the commodities market well.

This acquisition would mark Vedanta's global entry into the oil and gasupstream business. Vedanta, which already has an exposure tocommodities such as iron ore, aluminium, zinc, lead and copper, will nowadd two major commodities crude oil and gas to its portfolio. Thecompany has a cash balance of about $7.5 billion, according to Vedantaspokesperson.

Vedanta is known for its fund raising capabilities and managingmineral resources, Mr Chaudhri said. Vedanta has a history of acquiringcontrolling stakes in all its acquisitions till date. In 2007, it had acquired a51 per cent stake in iron ore company Sesa Goa Ltd from Mitsui & Co for$981 million. Earlier in 2002, Vedanta had bought a 64 per cent stake inHindustan Zinc and in 2001, it had acquired 51 per cent stake inBalco.

Vedanta to enter steel sector with 5 mt plant


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Non-ferrous metals giant Vedanta Resources is planning to enter the

Indian steel sector with a 5 million tonne plant near Palaspanga in the

Keonjhar district of Orissa.

Vedanta, which is the holding company of Sterlite Industries, has

proposed to form a company, Sterlite Iron & Steel Company for the project,

which is estimated to cost Rs 12,500 crore (Rs 125 billion). Apart from the

steel plant, the project will involve developing iron ore mines. Sterlite Iron &

Steel will be a joint venture between the Vedanta group and Volcan

Investments, Vedanta's holding company. The project is estimated to

generate 8,000 jobs.

If the plant comes up, Vedanta will become the third-largest steel

player in the country after the Steel Authority of India Ltd and Tata Steel.

The chairman of Sterlite group, Anil Agrawal on Tuesday met Orissa ChiefMinister Naveen Patnaik and discussed about the project. Many senior

government officials were present in the meeting.

Sources said, the project will be fully integrated and the final output

will range from hot rolled and cold rolled coils to long products. The company

has entrusted M N Dastur & Co to prepare the feasibility study of the project.

"Iron ore mining was on the company's long term plans and given the

current scenario in the steel industry, this seems to be a right time to get

into the sector," group sources said.Meanwhile, the chief minister has assured the company top brass that

the government is committed to provide necessary support to accelerate

development of the project, including support in securing iron ore and coal.

For five million tonne capacity, the company will require about 500 million

tonne of iron ore reserve for which it is expected to apply for the necessary

mining lease later.

The chief minister, during the discussion, underscored the need for

proper environmental protection and compensation to the families going to

be affected by the project. It may be noted that Sterlite is currently engaged

in setting up of a one million tonne alumina refinery at Lanjigarh in Orissa at

an estimated cost of Rs 4,000 crore (Rs 40 billion). The alumina refinery is a

backward integration venture to support the expansion of smelting capacity

of Balco at Korba. The Vedanta group has interests in aluminium, copper and

zinc.
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1.VEDANTA RESOURCES PLC IS A LONDON

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