‘Vedanta will invest $8-9 bn in 3 years’

Diversified natural resources company Vedanta is betting on Electrosteel to add value to its iron-ore mine in Jharkhand. Electrosteel Steels is currently undergoing insolvency proceedings. On the sidelines of the company’s cancer hospital inauguration, Vedanta Ltd Chairman NAVIN AGARWAL talks to R Krishna Das about the company’s strategy. Edited excerpts:

We understand that you are opting out of bidding for Essar, but upbeat on Electrosteel.

We are a resource company and Electrosteel should be considered part of our iron-ore strategy. We have an iron-ore mine in Jharkhand and we want to see it integrated. We will go for mining and add value through Electrosteel.

Is the raw material crisis preventing the company from bidding for big steel players?

There is no shortage of ironore or bauxite in the company. The steel sector is not priority. In our existing projects of copper, oil. and zinc, the return is significantly more attractive than investing in anything else.

What are your expansion plans for existing projects?

We are investing $8-9 billion in the next two to three years to ramp up capacity. The main expansion will be in the oil and gas sector. The current capacity is 180,000 barrels per day, which the company plans to enhance to 300,000 barrels in the first phase and finally to 500,000 barrels in three years that would be 40 per cent of India’s oil output. The company will invest $3 billion in the project.

What are the plans in other sectors?

The second expansion will be in zinc, both in India and South Africa. The current capacity is 1 million tonne (mt), which Vedanta plans to scale up to 1.2 mt and finally to 1.5 mt. Under the plan, silver output will increase to 1,250 tonnes from 750, besides increasing the capacity of zinc international to 600,000 tonnes. The company will double copper output from 400,000 tonnes to 800,000 tonnes.

How are you going to fund expansion? Will you borrow?

No. The expansion plan will be self-funded and the company will raise funds from internal resources.

How do you see your revenue growth during the next financial year?

The company has a very strong balance sheet. In the next financial year, 2018-19, we will increase our revenue by 50 per cent.