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Vedanta to go for an oil refinery  

After becoming a global metals player, the billionaire businessman on Monday put his stamp on the Indian oil and gas exploration market by taking over the country's third largest oil and gas exploration company, Cairn India. TOI caught up with Vedanta ResourceschairmanAnil Agarwal soon after the deal was announced, and even over the phone from distant London, it was quite apparent that he was pretty happy with the way things had turned out.

He declared his intent of not just being happy with exploration but going the whole hog with an oil refinery sometime in future and expanding the business to Africa. Excerpts from the interview :

We heard you at the conference call in the morning, where you talked about Vedanta becoming the natural resources champion of the country but somehow it still does not explain why you are entering the oil sector?

It's a unique investment. The Indian natural resource is a growing sector. We will leverage our skills, delivery and cost structure similar to what we have done in our other businesses for Cairn India and make it grow. Besides, about 25% of India's oil production is from Cairn India, making it a prized asset. It's also in our backyard of Rajasthan where we have Hindustan Zinc.

You are getting into a sector where you will face competition from biggies such as Reliance Industries and PSU oil companies. How do you plan to carve a niche for the company?

It's only the controlling shareholders that have changed. Cairn India will continue to run the way it is with the existing management. We will work with them to unleash the potential of the sector. Through Cairn India we will go to Africa and Sri Lanka and we will also allocate funds for our expansion. Besides, we would also look at setting up an oil refinery in line with government proposals.

Do you have any plans to change the name of the company as the British parent has the same name?

There is no plan to change the name of Cairn India. Even for our past acquisitions like Sesa Goa, which is an Italian name, the original name continues to exist. Similarly, for Hindustan Zinc we did not change the name.

Would you have to pay any royalty for retaining the name Cairn?

No royalty has been envisaged in our agreement.

When did you identify Cairn as an acquisition target and how long did it take to close the deal?

This opportunity came to us about three months ago and then we moved forward as Cairn India has huge discovery rights in our backyard (Rajasthan) where we have our zinc operations. Cairn Energy also preferred us because of our past experience in adding value to our assets. The transaction will close early next year.

Cairn India investors may feel cheated that they are not getting the same price as the promoters. Its stock has also fallen.

It's a very good offer to the shareholders. The Rs 50 premium has been offered to Cairn as they have forfeited their valuable right to operate in the Indian subcontinent.

Do you foresee any regulatory challenges, especially since ONGC has a stake in the company?

We don't foresee problems.

You have made many acquisitions in the past. How do you rate this current one.?

The only acquisition which did not turn out to be good was India Foils. The rest of the acquisitions have grown five fold. In Sesa Goa, when we took over, the production capacity was 5 billion tonne per annum, which has increased to 25 billion tonne. Similarly, Hindustan Zinc has gone up from 1,25,000 tonne to a million tonne.

How do you describe your journey from Patna to London?

It has taught me many things. More importantly disclosures, transparency, fearlessness and humility. The bedrock of the group has been built on these principles.

Read more: 'We will look at setting up an oil refinery' - India Business - Business - The Times of India

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