Wheels of fortune: Patna boy rides high on ‘Cairn-do’ spirit
Mumbai: A section of analysts may have conveyed their discontent on the latest catch by Vedanta Resources—Cairn India—but its founder chairman, Anil Agarwal, was never known to take business decisions to please analysts.
Investors may have a nose for picking on the wrong moves by corporates, but for the Patna-born matriculate, business acumen is not something you acquire in B-schools.
Trace back to where Agarwal began 30 years ago as an electric cable maker. While another businessman in Agarwal’s place would have continued to focus on making cables, Agarwal decided to get into copper smelting. This was to mainly to meet his requirement of copper which was the most expensive input for making cables. These instances during the late ’70s sum up his uncommon business sense.
Copper was the starting point in his climb as a first generation entrepreneur. Agarwal was keen on making it big in a country dominated by a few large corporates and he proved skeptics wrong after he went in for a slew of acquisitions to expand his empire. It all started with public sector aluminium maker Balco, in which he acquired the government’s stake to enter aluminium, and later bought another government-owned company, Hindustan Zinc. It was then that the industry really took note of Agarwal’s growing appetite for acquisitions. By quickly turning around these loss-making PSUs, Agarwal also came to be known for his project implementation capabilities.
Despite not having either the initial sofistication to match the industry’s leading corporate leaders, or the pedigree, Agarwal, a son of a small time businessman who made aluminium conductors, developed a keen eye for assets that proved to be value accretive for his business. His inorganic growth spree earned Agarwal his current status, with perhaps the only thing organic about him being his business acumen.
Cut to August 2010, the market capitalisation of Vedanta Resources is $9.6 billion. His business has come a long way, from a turnover of Rs 3 crore in 1986 to about Rs 3,29,000 crore ($70 billion) in
just under 25 years.
“At the end of the day, Anil Agarwal is a business man. He knows how to walk the talk. When he first talked about listing Vedanta Resources on the London Stock Exchange, he was benchmarking his group against the likes of Rio Tinto and BHP Billiton, and not Hindalco. Now, when he is taking the first step into the oil & gas sector, he would be looking at the league of Exxon Mobil and BP,’’ said an industry expert.
Agarwal has shown interest in strong assets, which may or may not fit into stubborn management definitions of ‘core competence’ or ‘related business’. At one time, Sterlite Industries was eyeing the g ove r n - ment’s stake in Shipping Corporation of India in 2003, and a few years later, the flagship company of Vedanta had teamed up with Morgan to bid for a strategic stake in the oldest financial institution, IFCI. It is another thing that neither of the deals materialised. What mattered was the resolve of the man who was pursuing these assets — with the zeal of a takeover tycoon.
To gain industry leadership in iron ore in India, it acquired Dempo’s assets through Sesa Goa for Rs 1,750 crore last year. In May this year, Vedanta Resources acquired the zinc assets of Anglo American for $1,338 million, becoming the world’s largest integrated zinc manufacturer. Last year, Sterlite gave a strong fight for acquiring the operating assets of the beleaguered Asarco. However, this did not go in the company’s favour.
Agarwal doesn’t believe in fretting over deals gone sour. When Asarco slipped out of Sterlite’s hands, an insider had commented, “sometimes things happen for the better,’’ as if echoing the promoter’s thinking.
Now, with some of his mining activities coming in conflict with environment groups for alleged flouting of norms, the task ahead may seem uphill. The idea to spread the risk and expand the business portfolio may therefore stand him in good stead in the future. His penchant for diversification from non-ferrous metals to mining iron ore (when he acquired Sesa Goa) to power to the latest big move into oil and gas, stand out as he yearns to be the natural resource champion of the country.
“When Agarwal listed Vedanta Resources, he never claimed that he would restrict his company to metals alone. The word ‘Resources’ in the company’s name means he would look at every resource that makes business sense for the group to foray into,’’ said an analyst.
Who knows, the unassuming Agarwal may already be strategizing his next move to expand the resources basket. Except that it would be another milestone in his journey from being a scrap dealer to a metals & mining magnate, with his net worth in excess of $6 billion.
Investors may have a nose for picking on the wrong moves by corporates, but for the Patna-born matriculate, business acumen is not something you acquire in B-schools.
Trace back to where Agarwal began 30 years ago as an electric cable maker. While another businessman in Agarwal’s place would have continued to focus on making cables, Agarwal decided to get into copper smelting. This was to mainly to meet his requirement of copper which was the most expensive input for making cables. These instances during the late ’70s sum up his uncommon business sense.
Copper was the starting point in his climb as a first generation entrepreneur. Agarwal was keen on making it big in a country dominated by a few large corporates and he proved skeptics wrong after he went in for a slew of acquisitions to expand his empire. It all started with public sector aluminium maker Balco, in which he acquired the government’s stake to enter aluminium, and later bought another government-owned company, Hindustan Zinc. It was then that the industry really took note of Agarwal’s growing appetite for acquisitions. By quickly turning around these loss-making PSUs, Agarwal also came to be known for his project implementation capabilities.
Despite not having either the initial sofistication to match the industry’s leading corporate leaders, or the pedigree, Agarwal, a son of a small time businessman who made aluminium conductors, developed a keen eye for assets that proved to be value accretive for his business. His inorganic growth spree earned Agarwal his current status, with perhaps the only thing organic about him being his business acumen.
Cut to August 2010, the market capitalisation of Vedanta Resources is $9.6 billion. His business has come a long way, from a turnover of Rs 3 crore in 1986 to about Rs 3,29,000 crore ($70 billion) in
just under 25 years.
“At the end of the day, Anil Agarwal is a business man. He knows how to walk the talk. When he first talked about listing Vedanta Resources on the London Stock Exchange, he was benchmarking his group against the likes of Rio Tinto and BHP Billiton, and not Hindalco. Now, when he is taking the first step into the oil & gas sector, he would be looking at the league of Exxon Mobil and BP,’’ said an industry expert.
Agarwal has shown interest in strong assets, which may or may not fit into stubborn management definitions of ‘core competence’ or ‘related business’. At one time, Sterlite Industries was eyeing the g ove r n - ment’s stake in Shipping Corporation of India in 2003, and a few years later, the flagship company of Vedanta had teamed up with Morgan to bid for a strategic stake in the oldest financial institution, IFCI. It is another thing that neither of the deals materialised. What mattered was the resolve of the man who was pursuing these assets — with the zeal of a takeover tycoon.
To gain industry leadership in iron ore in India, it acquired Dempo’s assets through Sesa Goa for Rs 1,750 crore last year. In May this year, Vedanta Resources acquired the zinc assets of Anglo American for $1,338 million, becoming the world’s largest integrated zinc manufacturer. Last year, Sterlite gave a strong fight for acquiring the operating assets of the beleaguered Asarco. However, this did not go in the company’s favour.
Agarwal doesn’t believe in fretting over deals gone sour. When Asarco slipped out of Sterlite’s hands, an insider had commented, “sometimes things happen for the better,’’ as if echoing the promoter’s thinking.
Now, with some of his mining activities coming in conflict with environment groups for alleged flouting of norms, the task ahead may seem uphill. The idea to spread the risk and expand the business portfolio may therefore stand him in good stead in the future. His penchant for diversification from non-ferrous metals to mining iron ore (when he acquired Sesa Goa) to power to the latest big move into oil and gas, stand out as he yearns to be the natural resource champion of the country.
“When Agarwal listed Vedanta Resources, he never claimed that he would restrict his company to metals alone. The word ‘Resources’ in the company’s name means he would look at every resource that makes business sense for the group to foray into,’’ said an analyst.
Who knows, the unassuming Agarwal may already be strategizing his next move to expand the resources basket. Except that it would be another milestone in his journey from being a scrap dealer to a metals & mining magnate, with his net worth in excess of $6 billion.
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