Agarwal: Thinking big

Gilbertson: Bullish

Mumbai, Feb. 23: If the government is willing, the Sterlite group can create history.

Vedanta Resources Plc, the holding of the Anil Agarwal-led group, today indicated that it was open to the idea of offering a slice of the company — shares or Indian Depository Receipts (IDRs) — to the shareholders of Sterlite.

With the feel-good wave sweeping through the country, Sterlite sources are hopeful that the new government, which will come to power, will give a go-ahead to the company’s grand plan.

Senior Vedanta officials, who were in the city to attend a board meeting, said it could come out with a “medium-term exchange offer for Sterlite Industries shareholders” if the rules and regulations are in place.

According to them, the options before the company were to either issue IDRs or Vedanta shares to shareholders of Sterlite Industries. The second option entailed a detailed valuation, following which a swap ratio would be fixed.

“This would be done only after the government gives its clearance to domestic shareholders to hold shares of a foreign company listed elsewhere,” a Vedanta official said.

IDR, which is similar to a global depository receipt (GDR) or an American depository receipt (ADR), stands for any instrument in the form of a depository receipt against the underlying equity of the issuing company. Recent reports say that according to the draft rules for IDRs, overseas companies proposing to issue such receipts will have to ensure that the securities or the underlying securities are listed on an international stock exchange.

Such an exchange offer to Sterlite shareholders forms only one aspect of the “compelling strategy” that has been envisaged by the top brass of Vedanta led by chairman Brian Gilbertson and CEO Agarwal.

Gilbertson said as a part of this strategy, Vedanta has decided to invest $2 billion in brownfield and greenfield projects. Of this, $80 million will be used for capacity expansion of copper.

On the other hand, while aluminium capacity expansion at Balco will require $800 million, that in Hindustan Zinc is placed at $320 million. Further, an alumina project at Orissa will need an investment of $800 million. Gilbertson, who was optimistic about the Orissa project, said it would pave the way for Vedanta’s entry in the alumina market.