Tamil Nadu steps up to shut down Sterlite factory

Vedanta analysts are split on stock recommendation

After the death toll in Thoothukudi police firing rose to 13, the Tamil Nadu government said on Thursday it was taking steps to shut down the Sterlite copper plant. The police opened fire on protestors demanding the factory’s closure, alleging pollution was affecting their health. Denying allegations, Vedanta said it was working on restarting the subsidiary as soon as possible. The Tamil Nadu Pollution Control Board (TNPCB) had on Wednesday ordered the closure and disconnection of power supply to Sterlite. On Wednesday, the Madras High Court also put a temporary halt to Vedanta’s muchdelayed plan to nearly double capacity at the Thoothukudi plant, which would make it one of the biggest copper smelters in the world. Indian billionaire Anil Agarwal’s dream to turn London-listed Vedanta Resources into a global giant has taken a hit. Protests have hurt its valuation, bankers and analysts said. “This can lead to investors becoming more conscious against investing in the company, which can hurt long-term sustainability of some of the businesses,” said Shriram Subramanian, managing director of proxy advisory firm InGovern. Analysts say copper contributes around 8 per cent to the consolidated operating profit of the company. Vedanta analysts are split on their recommendation on the stock: five rate it ‘strong buy’ or ‘buy’, while three have placed ‘hold’ on the stock and two have tagged it a ‘sell’. In Thoothukudi, Vedanta’s copper plant has been shut for more than 50 days and will remain closed until at least June 6. Tamil Nadu Chief Minister Edappadi Palaniswami said: “Amma’s (J Jayalalithaa) government is taking the legal route to ensure that Sterlite is shut down.” Section 144 of the Code of Criminal Procedure was imposed to avoid untoward incidents. But the Opposition leaders decided to go ahead with protests, he said. The Federation of Tamil Nadu Traders Association called for a state-wide bandh on Thursday. The Opposition parties have called for another such bandh on May 25. Palaniswami said Sterlite had approached the TNPCB in April to continue running smelter, but was denied permission. He said the All India Anna Dravida Munnetra Kazhagam government had cancelled Sterlite’s permission during Jayalalithaa’s regime, but the management received a favourable order from the National Green Tribunal. The state filed an appeal in the Supreme Court against the order. The case is still pending. The TN PC Bin its Wednesday order said consent to operate was rejected due to non-compliance with certain conditions. However, the Sterlite management denied this and claimed it had complied with the regulations. The board said it had directed the firm to halt production. It alleged during an inspection in May, it found the unit was carrying out activities to resume its operations. It recommended an issue of direction for closure and disconnection of power supply to the unit.