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Vedanta Has Eyes on Investment in India

Monday, Sep 11, 2017

Metals and mining conglomerate Vedanta Resources seems bullish on India.

Chairman Anil Agarwal recently announced his group was actively thinking of investing about U.S. $9 billion (around Rs 50,000 crore) to expand its business in the country.

Why? In an interview, he said “this was the best time to invest in India,” proceeding to list out concrete reasons.

The Indian government’s reforms were one of them. Agarwal said bankruptcy law and Goods and Services Tax (GST) would help improve the business environment and act as a magnet for global investors.

Vedanta is a “biggie” in India’s zinc, aluminum and refined copper sectors, with market shares of 72%, 40% and 35%, respectively. It’s also one of India’s largest private sector iron ore exporters and it’s the operator of 26 percent of India’s crude oil production via Cairn India.

Agarwal’s recent announcement of his India plans advanced Vedanta Ltd’s shares by 1% when the markets opened last Monday.

In another interview, Agarwal said they were looking at investing U.S. $8-9 billion to expand capacity in oil and gas, iron ore, aluminum, and zinc by nearly 50 percent over the next few years. This will create 40,000 direct and indirect jobs.

Vedanta may be interested in picking up some of the “stressed steel assets” in India. Just last week, MetalMiner reported that one of India’s largest steelmakers, Essar Steel, which is battling bankruptcy, has potential suitors lined up for its assets — though most are unwilling to come on record for the time being.

One hangup in Agarwal’s plan could be the “retrospective tax.” For some time now, Cairns India and the Indian government have been at loggerheads over this tax. As the name suggests, this was a back-dated tax levied on some international companies, including a claim for about $2 billion from Vodafone, the British telecommunications company, which the government lodged in 2012 for capital gains tax it said was due from Vodafone’s 2007 purchase of CK Hutchison’s Indian business.

Mr Agarwal’s company was forced to hand over $104 million in payments as part of the Cairn dispute after buying Cairns India in early 2017.

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Now, in an interview to Financial Times, Agarwal has criticized some of the ministers in Prime Minister Narendra Modi’s government over this retrospective tax, and asked the government to settle the issue once and for all.

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