Vedanta Limited (VEDL) Earnings Call Transcript

Dear shareholders, good afternoon, and a warm welcome to you all to the Chairman's Townhall with shareholders of Vedanta Limited. [Operator Instructions] I will now hand over to Mr. Nigel. Over to you.

Well, hello and welcome to Vedanta Limited Chairman's Townhall with its shareholders. One of the first, you are in India. My name is Nigel D'Souza and as you all know, I'm the Deputy Editor with CNBC-TV18. I'm happy to be joined by Mr. Anil Agarwal, the Founder and Chairman, Vedanta Limited, and also we're joined by Mr. Jack, the Director of Strategy and Ms. Prerna as well, who is Deputy Head of Communications as well as the Corporate Company Secretary as well.

Well, Vedanta Limited has grown from an Indian domestic mining company into a global natural resource and technology conglomerate with over $35 billion of investments here in India. Mr. Agarwal, well, it's good to speak to you, as always, Mr. Agarwal. And in fact this time around, it's a little bit more special because we have got all your shareholders who are joining in on the call. And also, they want to understand your journey, what have you achieved so far? And more importantly, what's the vision for the company from here on? Well, to just tell everyone who's joining in. During the event, we'll be discussing some of the top questions that we have already put in and you all can join in and ask Mr. Agarwal itself. Well, Mr. Agarwal, before we get to the numbers, and discuss about your journey, there are a lot of young investors on this call who would like to understand your journey from here on. How you founded Vedanta and in fact, all those trials as well. I looked at your Twitter page and you were describing Dhoni. When he celebrated, he was behind. But there were many challenges. And at that point of time, he was upfront. You want to experience that as well many a time, right?

Many time.

So tell us more about that. Tell us about a couple of instances where, in fact, you would have experienced some of those challenges, but you overcame them and you prepped up the team as well.

Thank you very much, CNBC, Nigel to allow us to have this townhall. I thank you very much my shareholder, who's my family. Today, being a working day, you are sparing your time to listen to an ordinary man. Also, my 80,000 people who work shoulder to shoulder, they all are online. I'm nobody. They are the one who has done it. I'm getting a credit. So they all are there. Once again, thank you very much. This is a journey for people like you, people like me, a common man, who want to do something, try something in his life. All of you know the story, but Nigel is asking, I'm from Bihar, 19 years old, went to Bombay, never seen double-decker bus in my life, never seen the tall building. I've seen this -- I've got this experience and felt that I'm going to be here. And I was there, I struggled, very difficult, but all of us has gone through the difficulties. I've made my way one after other. I worked for somebody, failed one after other 9 business, made success, still the recognition was not there, which I wanted money. I wanted recognition. I heard that London is the place. With my wife, with the 2 children, without knowing anybody, I arrived Heathrow Airport, checking in the hotel with a 2-room, one for children, one for myself, [indiscernible]. And within 3 years, I was with only one aim to raise money and list my company, and I asked what is the most prestigious thing? And they said FTSE 100, best 100 company of the world. And trust me, it's sheerly determination, fearless, perseverance and humbleness, we have achieved -- we have raised $35 billion in London Stock Exchange, invested in India and short -- very short. This is something I could say.

All right. Mr. Agarwal, today, there's been a lot of to and fro and there's a lot of clarity that's awaited on one of your pet projects. That's the semiconductor issue. Now we had Mr. Rajeev Chandrasekhar as well earlier today. He as well, he clarified that it appears on the semiconductor issue is a bit of a technical issue. Could you tell us more about it? What's the investment you're looking at out here? And how do you see this project developing as well?

Like I had a dream in the past, I have a dream, [Foreign Language]. I'm looking forward my India to be a developed country. There is no country like India, with 1.4 billion people. Most of them are young like you and see the girls, the way they are coming out. The way -- I saw yesterday, the IPL match, the whole world says they never experienced this kind of experience where 30%, 40% girls were there, young people, cheering up, 100,000 people. So this is what India is. So this is what -- how do we I will -- we all have to be together to make sure we make our country as a developed nation where everybody should live, everybody like we have. We have to make our per capital income $5,000, which is at $2,000. The moment we reach $5,000, in the world, the average is about $15,000. At least we should reach $5,000. The moment $5,000 comes, we will be there. So we are looking at the semiconductor is a one thing is today's oil. We are a chip taker, will be chip maker. And this will change our country. This will change -- without chip, nothing will happen, time to come, whether it's artificial intelligence or anything. And you trust me, please trust me, this will happen, and we will do it. And then many more can come, they can do it also.

Okay. All right. So what we've understood since morning, particularly post what Mr. Rajeev Chandrasekhar said, that Vedanta it seems the group is ready with the 40 NM fabs. So the 28 NM fabs is something that maybe you are looking at developing. But tell us more about that, sir, in terms of the semiconductor dream project itself. And also since we have Vedanta Limited shareholders on the call, would you like to tell us what kind of role will the listed entity play in this?

One thing for sure, because we are in this business, we have a factory which makes display glass in Korea. In Taiwan, we are so well placed in Taiwan, TCMC, which is one of the largest manufacturer of semiconductor is around us. So we are fully equipped for making semiconductors. The government is also making sure this can only happen. We always live in the era of public sector and the government, and the government, and the government maybe when we got independence. It was the era where that time, government has to set up the manufacturing, and that's what they do. That has gone, that has gone. We have entrepreneur after entrepreneurs. This is the era of entrepreneur. We have to build better America than what India is. Semiconductors, these are very technical. We are very comfortable, and this question will come and go. And whether 29 or 30 or 20, we are fully equipped. We have David Reed, who is the pioneer of making semiconductors. He is hiring 400 people to make this happen. We have already selected the site of Gujarat. And government is with us shoulder to shoulder. The kind of confidence which I've seen in the government, in the Foxconn, anywhere. Some people say, if anybody can do it, will be Vedanta or Anil Agarwal. This is what the murmur people are talking about. So I feel very good. This is going to happen. As far as the Vedanta shareholder is concerned, they are my family. So we have to look at -- it is under umbrella, and there are a lot of things which we have to make sure, regulated, everything is taken care of. But I will always be, from bottom of my heart, that how our Vedanta shareholder is part of it, we will -- I will always be looking at that and see how this can happen.

All right. So you have a vision out there and you're telling us these plans are pretty much going according to plan as of now and the government and Vedanta Limited are working shoulder to shoulder to try to make this project possible, right, sir?

Yes. See, the foreigner, I'm son of soil. [Foreign Language] We are the risk taker. We are going ahead to build our country to make it a developed. And these things will come, this approval, that approval, but our Prime Minister only because of our Prime Minister, who is a visionary. He want to make sure that our country can develop, the poor to poorest can uplift, and this semiconductor will help. So we are going ahead. I'm not that educated, but I know for sure, I have a full assurance from the government, and I have given them a full assurance that we will work shoulder to shoulder, and we will make sure that semiconductor project comes. Also, please understand the world does not want us to produce semiconductors. There'll be hurdles after hurdles because they want to buy the semiconductor from them and build the product here, and we want to do both. We want to produce the semiconductor, and we want to build laptop, we want to build smartphone. Every 15 years girls or boy must have an affordable laptop. Those days has gone where we used to push our children to become a lawyer or a doctor or engineers. This is a time where they have their own vision and laptop will be window to the world, and this is what semiconductor will do.

Okay. All right. So that's the vision that we have. Maybe we're looking at NVIDIA the last few days, $1 trillion of market capitalization. I'm not sure maybe you have something in the offing out there as well in terms of this project. But for the time being, it appears, there will be some hurdles on the way. But it appears that you're pretty confident that you could steamroll all of that.

Hurdle is a state of mind. As long as you are doing for others, for your country and you are completely regulated and governance oriented, you have to risk -- take risk. These are the new theme for India and people like us has to come forward and take the first step.

All right. So semiconductor plant is still very much on, and you have a vision for it.

Already gone ahead.

Lovely. Okay. We have cleared that doubt. The other niggling problem is what's happening at Vedanta Resources, Mr. Agarwal? There are a couple of payments, I think, in the near term. We're looking at a couple of reports that came out today. And the near term, that's May and June, payments, I think, $500 million to $700 million, that's been taken care of at the parent level. But I think going ahead for the remainder of this year, there's still a couple of billion dollars. How sure are you that you can make these payments? Do you want to give a message out to your shareholders? Because Vedanta Limited is not something that people worry about. They worry about Vedanta Resources making those payments. So can you clear the air?

I think we are very comfortable debt. It is always the case when people like us is 10, we have to do 25% extra. When my daughter was studying in the U.K., I used to tell her, if you want 1:1, you have to do better than them. Same thing with us. We are very comfortable. We are the people who cash generate in the company. How can I give a dividend, the kind of dividend we have given, nowhere in the world, people can even imagine. For me, nothing is more closer to me than the shareholder. And I always tell them and promise them that there is no question where the dividend will not flow, where our payment, it is just -- even I don't even think that will be made because we have a cash flow, and this payment will be made. So as far as debt equity ratio is very comfortable. Our banks, lenders, everybody is very, very comfortable. I will -- my dream, my vision is, in few years, I will have a 0 debt company.

Okay. Zero debt company. But what about Vedanta Resources? Are you confident that all the payments that are due for FY '24 in particular, will be made? And I'll tell you from where this is stemming, because Hindustan Zinc had a lot of cash that used to be paid to Vedanta limited and in turn, it used to go to Vedanta Resources as well as your shareholders. So everyone gained in the bargain. Now the problem is Hindustan Zinc's cash in the books has actually gone down. You've already paid out a big dividend from Vedanta Limited. Should your shareholders look at more of the same in the coming year? And then that will be sure that, in fact, that $1.5 billion, $2 billion that are pending at Vedanta Resources will also be taken care of?

We have a complete business plan by which we are very comfortable to take care of debt or because all the money where we have built this company has come from the parent company, and we have fully planned how this will be paid. So this all have been lined up. There will be 0 debt on the top in a few years, and we are very comfortable that all the payment has been made in the past and will be made in the future, because we are a growing company and we do always something different. So people are -- the world does not want India to manufacture. So these are some hurdles and the people talk about [Foreign Language]

All right. Mr. Agarwal, we're getting a lot of queries that are coming in there from your shareholders, and we'll get to that in just a wee bit because I've got a few more questions for you. Let's clear the air on a couple of -- let's give them a good platform. And then we can get -- because we've got a lot of queries that are coming in as well.

It's a pleasure, pleasure to talk to them.

So I'll toss it to the Chorus operator in just a bit. But Mr. Agarwal, also, I wanted to clear a couple of other aspects then. Now you have 68% -- 68.11% in the listed entity, Vedanta Limited. And a lot of shareholders as well are wondering, do you have a plan to bring that down? You could easily sell a couple of percentage in the company, make yourself more comfortable. And then at the top, as you're talking about being debt free, maybe you do it from the cash, maybe you do it from dividend or maybe you pay some stake. You have trimmed off a percent, if I'm not mistaken. Actually, I checked the release as of March. Do you have plans to bring down stake further from here? Or will you hold on to this?

For me, it's only one thing, to make my country today, 50% goes, our money, hard earned money goes for the import of all natural resorts, whether it's oil and gas, whether it's gold, whether it's copper, whether it's fertilizer, and I'm on those sectors. And I've been saying from last 15 years is we have natural resource [Foreign Language] below the ground, we have all the resources. And I have the one who've taken a bullet to move forward to produce this asset. So as far as your question on the debt, right?

Yes, I'm asking about the promoter holding, which is 68.11%. You have a big vision for the country as well as at Vedanta Resources. Could it involve paring some stake in the listed entity, Vedanta Limited, from 68.11%?

We have no plan, but as -- no plan at all, but hypothetically, I'm talking about, we have to take our country as a developed nation. And for that, if any point of time, for me to sacrifice to take this company forward, I will do it, not for my personal benefit, only for my shareholder benefit and take my country forward.

Okay. All right. So as of now, there are no plans. But if the need arises in the future, you could look to pay some stake, if the need arises and if it's in the interest of the company as well as of the country. So we get that point.

Shareholder. Most important is shareholders.

Are there shareholders are listening in, sir, and I think we'll have a couple of more queries on that. Could this involve -- just yesterday on the exchanges, to Glencore, you have raised some money, $250 million approximately by some pledge, 4.5% odd. Does it stick to that pledge? Or is there a bigger plan? There was some rumor out there that maybe Mr. Agarwal has a bigger plan. Glencore is now only lend some money on the basis of this pledge. But is there a bigger plan in stock?

Not at all. This is a normal business because they are the largest trader of the world for the natural resource, aluminum, copper, zinc. And we have this trade relationship. And these materials are in short supply. So we take some money. And in the -- as far as we take the money and whatever we -- to make them comfortable, if we have to pledge the share, we pledge the share.

Okay. All right. Because now it's almost entirely pledged, your holding in the company.

It doesn't matter because it plays for the particular amount and a particular amount is so insignificant. And that's fine with us.

All right. But there is no bigger plan then? It's just a pure pledge?

Not at all, except what we have done for the trading purpose.

Okay. All right. But there's nothing like you're looking at doing a tie-up with Glencore or anything like that?

No, no. But they are the people who are the biggest trader and the manufacturer of natural resources. And we have a very, very good relationship with them.

Okay. All right. What's happening with Hindustan Zinc then, Mr. Agarwal? The last time we spoke, there was that chatter that maybe Hindustan Zinc is they could be looking at buying out international zinc assets, which didn't happen. But is that completely off the table? Or is there a plan going ahead? And also that the government of India, as you've said repeatedly, if they want to sell, you're a willing buyer up to the quantum that you are allowed to, maybe 5% or so. Anything you've heard of that?

Yes, we are going through that transition. Our Prime Minister has always said government has no business to be in the business. Government has never failed in their commitment. It's a fully committed and agreement that how they will sell the share. It is very unfortunate that has not happened. Government really want to do it. But for some reason, it has not happened. And these companies has to be Board-run companies. The whole world run on the Board-run companies, and that's what it should happen. We have a huge plan for the Hindustan Zinc because it is the kind of return we have given there've been 70% return on the investment. So government has made a lot of money, almost INR 40,000 crores we have given to the government. So I have no doubt because I'm so Indian, I have no doubt that the government will take a step to make sure they want to do it, so they get the money and they divest their holding.

All right. Mr. Agarwal, I would have to give that to you, though. The way you've turned around this asset has been phenomenal in the last 20 years or so. So that's -- kudos on that front. But do you believe, we've been waiting for the last few years. I think we spoke in FY '22. You were indicating that I think this year, they'll do it. FY '23 passed as well. We always almost heard that announcement that the government of India, that 29% stake that they have, maybe they're looking at selling it. '24, do you think it will finally take place? Some divestment from the government of India stake. And if that is the case, you are a ready buyer?

I'm talking to you. You can understand when I sit in London, the whole world asked me this question. And I'm son of the soil and I said, "Look, when you work in India, you have to have patience." Though our youth does not have patience, but this is the phase we are going through the transition period. This government is doing everything possible to make things move faster. Judiciary is looking everything to move faster. I hope things will happen. It's not in my hand.

All right. And a lot of the youth in there, they have obviously been tracking your story and they're tracking your story all the way from Bihar to Mumbai to London and the way of growing the company as well. Before we hand it over to your shareholders who are waiting by, what about there is this slow down. Every now and then we hear about this global slowdown. Maybe India as well could slow down a little bit. You would have seen many of these cycles, right? The rate hikes, the rate cuts, the slowdowns of the world, the recession. What's your comment?

See, we Indians, very optimistic. Now we have -- we are at least 20, 25 years behind. Our youth, our children, they have low patience. They are moving. The fellow who is on the cycle want a scooty, scooty fellow want a scooter, scooter fellow want a car. He want electricity. He want tap water. Everything -- he wants his children to go to the English school. There is no question, the demand. We have almost 65% people in the below middle class, and they always jump into the middle class. And the demand, the world is looking at, what demand we will have, so where the recession will come, we need all our youth who are there, entrepreneur, to come forward and to be foray in these areas.

Okay. All right. Mr. Agarwal, you have answered a fair bit of our queries. I think we'll get in a couple of shareholder queries now. I may have a few more for you. But for the timing, let's welcome our shareholders. I think we have the operator who's queued up a couple of calls. So let's hear out from one of the shareholders who wants to ask a question to Mr. Agarwal himself.

Thank you, Nigel. [Operator Instructions]

Could we have the first caller, please? Okay. All right. I think we're getting the callers in. All right. Yes, we have our first call.

Ms. Amina Chouhan, please go ahead.

Am I audible?

Yes, please.

First of all, I would like to congratulate the whole Vedanta team for organizing this townhall, which has -- which no other company has ever done in the past, and this is such a unique opportunity for all of us to interact with the mining magnet himself. Chairman sir, heartiest congratulations to you for being awarded with the Global Indian Award. And with your leadership, I'm proud to be part of Vedanta as a shareholder. Under your leadership, company has grown a lot, and we expect that company will grow more in future as well. And I'm also very grateful for the high dividends paid during the current year and would pray to the Almighty that the company will be in a strong position to take -- give the same return in future as well. Sir, on that note, I would like to ask that whether we can expect the same return in future as well? And before concluding, we are very grateful that Vedanta gained our trust time and time again. And we expect that the company will do better and better in future and all the very best to you and our company.

Amina, thank you very much for a kind word. I can assure you I'm very conscious to make sure that the dividend policy remains same as it is today. At the same time, the way I'm looking at the business what we are literally exclusive business, I have no doubt the appreciation of our asset will also be there.

I now invite our second speaker shareholder, Mr. Piyush Sinha, to ask questions or provide comments.

A great initiative, this is a great initiative, sir. And this townhall is a great channel for the shareholders, especially young shareholders like us to express our views. Vedanta has always set benchmark when it comes to value creation for the shareholders. And it is evident that under your true leadership, the company has shown immense growth, and we are sure that it will outperform our expectation in the coming year as well. Coming from a small town to being at the cover page of the Forbes, yours is a truly an inspirational journey, sir. And I personally think that your strategy can be of immense help to the budding entrepreneurs. I would like to take this opportunity to thank you for being such a wonderful and inspiring leader. I have no question for today, sir. I just wanted to express my gratitude for giving me a chance to connect with you. And as a proud shareholder of the company, I want to wish you and your family member good health and height of success. All the best, sir, thank you. Thank you once again for the opportunity.

Very nice, Piyush ji. Piyush ji, our country is a country of entrepreneurs. You see that we are [Foreign Language] I'm the example of a start-up. I'm the example, a very small example, and [Foreign Language] and I have no doubt many more will come. So thank you very much, Piyush ji.