For years, Anil Agarwal worked hard to build a reputation as one of India’s most extraordinary survivors. The millionaire entrepreneur, who started as a scrap metal dealer, overcame financial difficulties, conflict with the government, and disagreements with Indigenous people about expansion plans to create a mining conglomerate that could compete with any other. Anil Agarwal built a reputation as one of India’s most extraordinary survivors over time. The millionaire magnate began his career as a scrap metal dealer and created a mining conglomerate that could compete with any other, despite financial difficulties, tension with the government, and conflicts with Indigenous people over expansion goals.
Agarwal, however, just encountered one of his most difficult actions. Most of the $2 billion in bonds issued by the tycoon’s Vedanta Resources Ltd. are due in January 2024. If not, his company, which has its headquarters in London, risks becoming even more garbage and losing vital access to capital. That’s terrible news for one of India’s wealthiest men, who has long hoped to challenge Glencore Plc and BHP Billiton for the position of the leading provider of natural resources globally.
“Anil has always been a survivor.”
The individual himself is another uncertainty in the mix. Depending on who you ask, Agarwal’s forthright approach to negotiating deals could be both a risk and a benefit. He is frequently called India’s equivalent of a Russian-style oligarch: a tenacious businessman who built his fortune by seizing and restoring state-owned businesses. Then came a luxury lifestyle overseas, which included purchasing a property in London’s affluent Mayfair district. “Anil has always been a survivor,” stated Tom Albanese, who led Vedanta Resources as CEO from 2014 to 2017. Considering that English was not his native language, he sprang from the street. He constantly believed he needed to show something.
Vedanta Ltd. and Vedanta Resources did not respond to requests for comment. The strength of Agarwal’s political ties may determine what happens to him. Offloading $3 billion worth of assets to Hindustan Zinc Ltd., a Vedanta subsidiary partially owned by the Indian government, is one of the company’s main survival strategies. If the transaction goes through, officials have threatened legal action.
Company miscalculated Government’s attitude
Delhi is concerned that the Agarwal zinc transaction may influence the government’s desire to sell its stake to improve public finances. Sunny Jiang, a fund manager of Haitong International Asset Management Ltd., stated, “One simple way to raise cash has failed.” “The company miscalculated the government’s attitude this time.” Agarwal’s portfolio may be impacted by how he handles this situation. Prime Minister Narendra Modi is trying to entice businesses to locations like the industrialist who wants to increase India’s manufacturing capacity and has put up his hand: China. To construct a $19 billion semiconductor facility, his holding firm Volcan Investments Ltd. has partnered with Taiwan’s Hon Hai Precision Industry Co. This month in New Delhi, Agarwal reiterated that Vedanta is in an excellent position to pay its debt. He claimed that attempts to discredit him stem from resentment over India’s emergence as a significant global force. On stage, he declared, “I haven’t defaulted on anybody’s money. “One can keep developing as long as there are no governance problems.”
Business Tycoon Anil Agarwal comes from a lowly background
Raised in the Indian state of Bihar, he took over his father’s aluminum conductor manufacturing company in the 1970s before starting his firm. Vedanta was created as a result of several bold acquisitions. Agarwal sought a majority ownership position in the state-owned Bharat Aluminium Co. 2001. His offer of 5.5 billion rupees at the time raised concerns about the company’s ability to finance the acquisition. However, Agarwal’s mastery of public relations enabled him to control the narrative. During a media blitz, he boasted about buying the largest company in India and used a tender to ask banks for money. In a 2016 interview with local media, he said, “All banks wanted to give us money.” Agarwal dramatically grew his empire in a matter of years. Despite having no experience, he successfully bid for the iron ore producers Sesa Goa Ltd. and Cairn India after acquiring Hindustan Zinc in 2002. Before Agarwal took it private 15 years later, Vedanta was the first Indian company to list in London in 2003. With mining activities in Africa and India and a focus on the metals zinc, lead, and aluminum, the firm is currently one of the world’s most outstanding suppliers of natural resources. According to Agarwal’s admirers, the millionaire has prospered by building relationships with banks and diversifying his enterprises. He is sometimes called a “compulsive entrepreneur” who manages his businesses personally and has a low tolerance for incompetence or laziness. Former Vedanta Resources CEO Albanese remarked, “The longer I worked with him, the more I saw how sharp he was. He doesn’t always appear to be the most intelligent person in the room.
Anil Agarwal in Controversies
A Character that Divides Nevertheless, Agarwal has cultivated controversy, earning the wrath of organizations that support the environment and human rights. Vedanta was forced to close a profitable copper smelter in southern India in 2018 after clashes with the police resulted in the deaths of over a dozen persons. Villagers claimed that the operations significantly increased pollution, which Vedanta has refuted, and over bauxite mining in Odisha, tribal people, and Vedanta engaged in conflict for several years. At the time, protests attracted international attention and expanded to London and New Delhi. Important purchases have also turned sour. However, the Zambian government has attempted to liquidate Konkola Copper Mines Plc, a Vedanta subsidiary in Africa. Authorities charged the corporation with underpaying taxes and lying about its expansion goals. Vedanta has denied any wrongdoing. An essential component of Agarwal’s holdings is Hindustan Zinc. After rival miner Anglo American Plc rejected a planned merger in 2017, Agarwal partially bought the majority interest in the business by borrowing money from a Vedanta subsidiary.
Agarwal kept the global mining sector wondering about his motivations—and whether the acquisition was more about him than anything else—before selling the stake two years later. It’s unclear if Agarwal can guide Vedanta through the current turmoil. Vedanta’s capacity to pay off future maturities was a concern raised by S&P Global Ratings in February, and this month, Moody’s Investors Service further downgraded the company’s debt to junk status.
Accessing the Capital Market Challenge
Due to elevated international interest rates and a reduction in the value of Vedanta’s bonds, accessing the capital markets is challenging. The firm’s dollar notes are trading for three out of six cents or less, often seen as a distressed price. Vedanta stated on February 28 that it was “fully confident” of fulfilling future maturities for the quarter ending in June, notwithstanding these difficulties. Following a decline in the share price of its Indian subsidiary, which corresponded with the government’s warning regarding the Hindustan Zinc purchase, the business has attempted to reassure investors. A less than 5% investment in Vedanta Ltd. is one option to generate money, according to people familiar with the events who wanted to remain anonymous because the information is confidential. Only if alternative means of obtaining money are unsuccessful will a stake sale be considered the people.
Vedanta Ltd. and Hindustan Zinc dividends are becoming increasingly crucial to Agarwal as he works to reduce the $7.7 billion in debt his holding company owes. The Indian subsidiary has distributed over 301 billion rupees ($3.6 billion) in dividends over the current financial year, which ends in March. Tuesday will see a record sixth dividend. CreditSights senior credit analyst Lakshmanan R expressed optimism that Agarwal will survive to see another day. He claimed that Agarwal was previously on the verge of defaulting, “but he has always come out unscathed.”