UNTIRING AGARWAL

 

   

"It is often said that what you take from the Ganga, you must return to the Ganga," says the billionaire boss of Vedanta Resources. Dressed in a sober blue suit and rectangular-framed glasses, Agarwal is a towering figure in India. Not just because he is 6 feet tall, but also because the self-made billionaire's London-listed natural resources conglomerate, which turned over $11.5 billion last fiscal, is the sixth biggest in the world (by EBITDA). And with a personal fortune of $3.2 billion, he is ranked 97 on India's richest list in FY 2022.

 He has pledged most of his billions for philanthropic causes and hence refrains from being called a billionaire. He has promised to give away 75% of his fortune, a decision he took with his family in 2014. He says,"Money is important. It gives you confidence. But I never came from that background, so it makes me uncomfortable". 

In his early years growing up in the constricted lanes of Goria Toli in Patna, Bihar, his life was hard. He was schooled until the age of 14, barely learning a word of English, and dabbled in his father's aluminium conductor business. It is rightly said that what you do from the age of 14 to 19 creates a lasting impact on your future. Hence, whenever in doubt about what motivates you or what you are passionate about, try recollecting your teenage years. Other billionaires like Mr. Bill Gates and Mr. Buffett have extensively talked about this. Mr. Gates started coding when he was 9. Mr. Buffett was buying and selling securities when he was 11. An early start creates a lethal competitive advantage.

Coming back to the story, his ambitions outgrew what Patna had to offer when he was 19, and hence, he did what every aspiring businessman did back then: they ventured on their journey to Bombay. He came to Bombay in order to become a scrap metal dealer. "At that time, my only purpose was to make money and to succeed," confesses the 64-year-old in still patchy English, despite having lived in London for 19 years. But who gives a damn about "patchy English" when you have $3 billion in the bank? Money talks louder.

Today, having grown Vedanta Resources into a global giant with operations in aluminium, lead, silver, copper, iron, steel, and gas across four continents and a market cap of around $3.1 billion, Agarwal's ambitions have changed. The founder, chairman, and, with his family, owner of a 69% stake in the company, still wants to grow Vedanta and has long talked about turning it into the next BHP or Rio Tinto (the largest miners in the world). But through that growth, he wants to give back. By developing India’s natural resources sector, he believes, jobs will be created and poverty will be eradicated. "India needs many more companies like ours," he says.

 

He recalls a time about ten years ago when his late grandfather took an oath from him. "He wanted me to pledge 90% of my wealth. I negotiated, and we settled on 75%," he says.

 

Back then, Agarwal worked out of Rasikbhai’s compact office using a small desk and a shared telephone line. He would collect scrap metal from cable companies and sell it to other traders, including Rasikbhai, who became his trusted business partner. When the chance to buy Samsher Sterling, an ailing Mumbai-based cable-making company, came up in 1979, Agarwal jumped at it. He didn’t have the money for it, but no opportunity was too outlandish to pursue. Anil Agarwal has been famously quoted as saying that entrepreneurs do everything in their control to decrease risk instead of going for high risk, high rewards. Let me narrate to you all a funny incident.

Mr. Agarwal was looking for an acquisition back in the 90's. He was still new in the market, but his plans were bigger. His wallet wasn't enough for acquiring that business and hence he approached the Chairman of Standard Chartered bank for a loan of Rs 50 lakh. With all due respect, the chairman rejected the loan. But Mr. Agarwal was adamant about the loan as the acquisition was very crucial. Back then, a word from Mr. Dhirubhai Ambani was enough for someone to get a loan from any bank. What Mr. Agarwal did is that he organised a small party at the Taj and convinced the chairman of Stan Chart to attend the party by saying that Mr. Dhirubhai was going to be there. Dhirubhai has no idea about this mess. Somehow Mr. Agarwal found out that Dhirubhai regularly attends the Oberoi club. He went there and as Mr. Dhirubhai was about to enter the elevator, he slipped in and said that I have organised a small party at the Taj and have said that you will be there. Both of them looked at each other for a minute and then Mr. Ambani said that he was busy. 

Later that evening, when the party commenced, Mr. Ambani did come, shake some hands, and left after 10–15 minutes. Later, when Mr. Agarwal went to pay the bill, he was surprised to know that Mr. Ambani had already paid the bill. The manager said that Mr. Ambani was fascinated by his courage, and to his surprise, his loan was also sanctioned. That's the story of ambitions, courage, and a bit of self-belief. Even today, when Mr. Agarwal recollects the story, he says that Mr. Ambani taught him a valuable lesson on being humble and staying grounded.

 

Continuing with Mr. Agarwal's story, in 1995, he acquired Madras Aluminium Company, or Malco, setting foot in the aluminium business, and further expanded his copper business by snapping up mining assets in Australia in 1999. At the turn of the millennium, when the government was looking to privatise its loss-making mining assets, Agarwal swooped in. He bought a 51 percent stake in Bharat Aluminium Company (Balco) on the cheap in 2001 and orchestrated a turnaround.

So also with Hindustan Zinc. At the time, wholly owned by the government, the company was in the red, and its zinc-lead mines spread across Rajasthan were believed to have reserves to last for only five years. But Agarwal spotted an opportunity. Agarwal acquired a 65 percent stake from the government in 2002 and infused fresh funds, expertise, and technology into the ailing entity. This helped lower costs and boost productivity, making the once uneconomical company essential. Today, Hindustan Zinc meets more than 80 percent of India’s demand for zinc. It is the second-largest zinc producer in the world after Anglo-Swiss mining giant Glencore, and its cost of production is among the lowest in the world. It has reserves to last another 25 years and is also Vedanta’s most profitable unit. "If I find things are in range, I never take time to shoot," says Agarwal of his acquisition-led strategy.

 

But it’s not just undervalued assets that he zeroes in on. Vedanta’s purchase of a majority stake in Cairn India, a subsidiary of British oil company Cairn Energy, for more than $8 billion in 2011 was an expensive one, but it was important as it marked Vedanta's entry into the oil and gas sector. Plus, with the merger of the cash-rich energy business into Vedanta Limited (formerly Sesa Sterlite)—the debt-ridden Mumbai listed entity that is 51 percent owned by Vedanta Resources—earlier this year, Agarwal not only streamlined the group’s debt but also came closer to his "dream" of creating an integrated resource major out of India.

The country's geology is similar to that of mineral-rich North America, Latin America, Australia, and South Africa. Yet we produce only 20 percent of our natural resource requirements. More than a third of India’s import bill—now at around $500 billion—is spent on petroleum products. This is around 10 percent of the GDP. Oil and gas aside, India also purchases large quantities of gold, silver, coal, and fertilisers from abroad. Instead of extracting and utilising our natural resources, we are paying billions of dollars to import them.

 

His purchase of Cairn India, he points out, was with the view of making India self-reliant. The energy business currently meets 26 percent of India’s crude oil requirement, which Agarwal aims to increase to 50 percent over time. A country that doesn’t produce 50–60 percent of its energy requirements cannot survive," he contends. Today, Vedanta is so big that it contributes more than 80% of India's zinc requirements, 95% of silver, 50% of aluminium, and 35% of copper through its various subsidiaries. The group plans to invest $10 billion in the next 3–4 years to grow the existing businesses as well as launch new ones. I surely want to be a part of this journey. Do you?