MAC: Mines and Communities

Vedanta's girl has got the "X Factor"!

Published by MAC on 2012-03-27
Source: Economic Times, NDTV, Bloomberg (2012-03-23)

Sesa Goa acquitted of fraud

Vedanta Resources' cynical campaign, to create an impression of "happiness" among communities impacted by its destructive activities, has been widely ridiculed. See: Vedanta betrays the people - yet again!

Now, it turns out that Vedanta's supremo, Anil Agarwal, has been grooming his own daughter to spread the corporate guff.

Meanwhile, India's Serious Fraud Office has concluded that Vedanta's subsidiary, Sesa Goa, did not infract rules on the invoicing of its iron ore exports.

And, in a further boost to the company's fortunes, Vedanta's full take-over of its Hindustan Zinc subsidiary now looks close to fruition. See: Vedanta in India: a bad project is given thumbs-down

Anil Agarwal mines daughter Priya's skills for Vedanta Resources

Economic Times of India

22 March 2012

MUMBAI: From destructive mining major to compassionate corporate - when Anil Agarwal, executive chairman of the $11.4-billion Vedanta Resources, had to pick an image doctor to engineer such a change in popular perception, he chose his 22-year-old daughter Priya.

The young Agarwal's first real assignment - a national advertising campaign 'Creating Happiness' in which she has spent Rs 20 crore so far - is already mired in controversy.

Vedanta has often been accused of questionable practices, in precisely the kind of tribal areas where this campaign claims it is "creating happiness." But she is unperturbed. "Everyone is involved in controversy but the good work has to continue. We don't bother with controversies," says Priya.

The national campaign airing across 37 channels seems timed with the Cairn acquisition, the Supreme Court appeal next month in the Niyamgiri mining case and lobbying with the government, according to Ashish Bhasin, chairman-India and CEO-South-East Asia, Aegis Media, a media communications firm. "It seems they are attempting to build long-term goodwill and a positive image with the government or certain groups," says Bhasin.

In August 2010, the environment ministry rejected clearances granted to a joint venture led by the Vedanta Group for mining bauxite from Niyamgiri hills.

The final hearing on the group's appeal against this is coming up on April 9. Vedanta's environmental and human rights record has been criticised by investors such as Church of England, Joseph Rowntree Charitable Trust, the Marlborough Ethical Fund and Millfield House Foundation, human rights and activist groups like Amnesty International, Survival International, and by the British and Norwegian governments.

Naive or not, Priya has set out on what Vedanta's many critics would say is a mission impossible - remake Vedanta's brand.

Tough Task at Hand

The exercise is aimed at branding the group as the mining concern, but as a missionary organisation with a social conscience. "It's always been on our minds and my father always wanted to do this," she says. Priya also joined the board of Cairn India as a director three months ago.

Her father doesn't read too much into her two new assignments. "Right now she is learning and executing. I am sure she would need some more time to choose her field," he told ET in an email response. "I am just testing the waters and spending two months each in the marketing, human resources and public relations departments of the company, though my interest lies in PR," adds Priya. But have no doubts, she is the one spearheading the group's image makeover.

Piyush Pandey, executive chairman and creative director, Ogilvy & Mather, India and South Asia, knows Priya as a former employee and a current client. "I didn't work directly with her but I have heard from the team that she is hardworking," he says. "It is too early to put the burden of being a successor to Anil Agarwal at such an early stage in her career," he adds. Pandey, who interacted with her as a client, says she has the potential to grow into the family business if she works towards it.

O&M helped Vedanta fashion the entire campaign. Vedanta has instituted 3,000 'anganwadis' or community centres, providing childcare programmes among mothers in these poorer communities around their sites and plan to scale it up.

With Rs 20 crore already spent on television, Agarwal is planning more. Her next phase is a carefully-crafted image-building campaign to include print and social media sites like Twitter and Facebook. Her brother Agnivesh Agarwal, 32, is also a part of the business and is heading.


No corporate impropriety by Sesa Goa, says new SFIO report

NDTV

5 March 2012

In a U-turn, the fraud probe agency SFIO in its latest report said that mining major Sesa Goa Ltd (SGL) has not indulged in any corporate impropriety with regard to allegations of over and under invoicing of exports and imports.

"Percentage of commission and rates of invoicing in import of coking coal and export of iron ore for sale of iron ore by SGL were nearly at the same levels according to the prevailing market trend during the period from 2001-02 up to 2006-07," said the second report of the Serious Fraud Investigation Office (SFIO).

In its earlier report last year, the SFIO had found various irregularities and had recommended that prosecution be filed on nine counts against the SGL and its management.

The charges against SGL included excess payment of commission to sale agents, over-invoicing of import of coking coal and under-invoicing of iron ore exports amounting to about Rs. 1,000 crore.

Following repeated representations from the company, the SFIO conducted second probe and concluded that had the SGL provided the explanations earlier, the conclusion would have been in their favour of the company.

"Had the management of SGL given explanation in their statements recorded by the SFIO during the investigation which is given now in representation, then the conclusion of SFIO, would have been different and in favour of SGL", said the report which was submitted to the Corporate Affairs Ministry on February 28.

The Ministry, which had earlier order prosecution proceedings against the SGL, will now have to take a call in view of fresh findings of the SFIO.


Vedanta ups the ante for Balco, Hindustan Zinc

Bloomberg

23 March 2012

New Delhi/Mumbai - Buying the stakes will give Vedanta's Mumbai-based unit Sterlite Industries (India) Ltd. control over a combined 964,000 tonnes of annual zinc and lead-producing capacity and full ownership of a two million tonne-a-year bauxite mine.

The government is seeking to narrow fiscal deficit through steps including asset sales and capping of expenses. "This will be positive for Sterlite," Rakesh Arora, head of research at Macquarie Capital Securities (India) Pvt, said in Mumbai. He has an outperform recommendation on Sterlite and expects the shares to rally 59 percent in 12 months. "The cash that Sterlite will spend will come back in the form of surplus from Hindustan Zinc."

The zinc maker has cash and equivalents of $3.35 billion, according to data compiled by Bloomberg.

Pavan Kaushik, spokesman at Hindustan Zinc, declined to comment. Senjam Raj Sekhar, a spokesman at Vedanta Resources Plc, didn't respond to two calls made to his mobile phone and a text message seeking comments.

Government stake

Vedanta offered Rs 15,000 crore for one company and Rs 2,000 crore for the other, Trivedi said, without identifying them. The government's 29.5 per cent stake in Hindustan Zinc is valued at Rs 16,200 crore at the current share price. Hindustan Zinc fell 0.2 per cent to Rs 130 at 9.19 am in Mumbai trading, giving it a market value of $10.8 billion. Sterlite gained 0.3 per cent to Rs 115.80.

Sterlite, the nation's biggest copper producer, owns 64.9 per cent of Hindustan Zinc. The company may complete the transaction this year, Agarwal said on February 25. It bought 51 per cent of Bharat Aluminium, which owns the bauxite mine, in 2001 and a majority stake in Hindustan Zinc a year later.

Lack of full control at Hindustan Zinc has undermined decision-making at Vedanta. In 2010, Vedanta's plan to buy Anglo American Plc's Skorpion zinc mine in Namibia through Hindustan Zinc failed after the Indian government didn't ratify the deal. Vedanta completed the purchase through Sterlite.

Combining Units

Agarwal is combining the group's publicly traded Indian units into a new company after an $8.67 billion purchase of oil producer Cairn India Ltd, Vedanta said February 25. Sesa Goa Ltd, India's largest iron-ore exporter, will absorb Sterlite in an all-share deal.

Vedanta Aluminium Ltd and Madras Aluminium Co will also be merged into the new company, Sesa Sterlite.

Vedanta plans to transfer debt of $5.9 billion to Sesa Sterlite, reducing outstanding loans by 61 percent to $3.8 billion and cutting debt-service costs by $300 million for the year ending March 31, 2013, the company said.

India's budget deficit may widen to 5.9 per cent of gross domestic product in the year ending March, compared with a target of 4.6 per cent. Finance minister Pranab Mukherjee aims to cut the shortfall to 5.1 per cent of GDP in the next financial year.

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