Anil Agarwal, chairman of Vedanta Group, said the government’s incentive project on semiconductors could turn India into another Silicon Valley or Taiwan. He said that electronics is a sector where the country has immense potential for development.
“Today we only have branded products like mobile phones etc. Once our raw materials (chips), the cycle will be complete. We can create a Silicon Valley in India or elsewhere in Taiwan, “Agarwal said in an interview with FE.
Agarwal said Vedanta is confident of getting global orders once its semiconductor manufacturing unit is launched in India. The company is already making fab glasses and optic fiber globally, so it’s not going to be a new business.
He added that funding for the semiconductor business – which is capital intensive and has a long gestation period – would not be a problem in India as it would generate enough cash to feed other businesses such as oil and gas, mining, iron and steel fab units. . “We have decided not to de-merge our businesses into separate verticals of aluminum, iron and steel, oil and gas so that cash flow can continue. This year we will make a profit of 10 10 billion so that there will be cash flow, ”Agarwal said.
The chairman hopes that the government’s approval for the semiconductor unit will come within two months but the work of design, land and location identification etc. is going on in parallel in the company.
“We have an initial investment plan of 2 2 billion that will eventually reach 20 20 billion. Various state governments have approached us to provide land for the project, and we are in talks with several of them. We will mark the location to set up the unit soon. We want to see which state can create a complete cluster of units, ”he said.
Five companies have applied for the government’s `76,000 crore incentive project to develop semiconductor and display manufacturing ecosystems. Of these, two are from Vedanta Group – one where it has formed a joint venture with Foxconn to manufacture chips and the other for its own display fabs.
Speaking about Hindustan Zinc (HZL), Agarwal said that Vedanta has withdrawn its arbitration against the central government in the second call option for acquiring a 29.5% stake in the company. The arbitration was withdrawn after assurances from the government that it would expedite the sale of the remaining shares. Although Vedanta cannot buy more than 5% because of a cap, Agarwal said the company would not have to go to the government for every little thing as soon as private parties arrive. The government can also get Rs 40,000 crore by selling shares. He said he would be willing to buy more if the government removed the cap, but that a diversified private holding was also okay.
In November 2021, the Supreme Court allowed the center to invest its remaining portion of HZL in the open market, citing the fact that the firm had long ceased to be a state-owned company. In 2002, Vedanta bought a 26% stake in HZL. It used the first call option in 2003 and acquired an additional 18.9% stake. Later, Vedanta acquired another 20% through an open offer. To occupy the remaining 29.5% of the government, it used the second call option in 2009, but the government rejected it. In view of this, Vedanta started arbitration proceedings against the government.
Agarwal said he advised the government that state-owned enterprises should move forward instead of privatizing, corporatizing them for better returns and greater equity participation. “In corporatisation, the government can sell its entire market share but keep a cap that an entity cannot buy more than 5%. This way new owners can look for professional management and run the company better and this will not be the case for a single owner to become rich and wealthy, ”Agarwal said.