Continued from Part Two.
Vedanta’s Copper Business May Also Drop
In fact, the fate of many an Indian project of Vedanta’s lies in the hands of the Supreme Court, rather than in the government’s. A case in point: Vedanta’s copper business.
Sterlite Industries’ copper smelter in Tuticorin in the southern state Tamil Nadu, which is crucial to the Group’s copper business, is stuck in the Supreme Court, awaiting an order on its fate. A PIL was filed in 1996 against the setup of the smelter and in Sept. 2010, the Madras High Court ordered the closure of the plant.
The company then appealed to the Supreme Court, which stayed it. Then in Aug. 2012, the Court ordered a joint inspection by the Tamil Nadu Pollution Control Board and Central Pollution Control Board of the unit’s effluent treatment and emission control measures.
Vedanta higher-ups are keeping their fingers crossed on this one. If the report is adverse and the Court decides that the high court order was correct, the plant will have to be shut down.
Buying Public Sector Companies
Another area where Vedanta finds itself in a conflict, this time directly with the Government of India, is the pending sale of the remaining stake (held by the government) in BALCO and Hindustan Zinc Ltd (HZL).
Vedanta has often claimed that when it had bought a majority stake in these companies in 2001, there was an understanding between it and the government that the latter would sell off the remaining shares in three years. In BALCO, Vedanta has 51 percent and in HZL, 69 percent. No doubt, the value of both companies has multiplied, but the government seems in no hurry to divest its remaining shares, because of a dispute over price.
According to a report by financial portal Moneycontrol.com, the Indian government was now mulling various options of ending its dispute with Vedanta. One of them is the listing of BALCO. The reason – by floating 10 percent of BALCO stake in an IPO, both parties can then establish the fair value of the remaining BALCO shares. The government and Vedanta would offload 5 percent each in the IPO.
There are several, similar issues around Vedanta’s operations in India. But despite all the hurdles and setbacks, Agarwal seems confident that by 2020, Vedanta Group will be huge in India and Africa, if this interview in Business Today is anything to go by.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.