Vedanta: what's in a name? Plenty!Published by MAC on 2008-02-16
Vedanta: what's in a name? Plenty!
16th February 2008
Reports from Orissa during the past fortnight show that local demonstrations against UK-listed Vedanta Resources PLC's Lanjigarh refinery, have not diminished since the Indian Supreme Court judged the company unfit to mine the Nyamgiri hills late last year.
On the contrary.
However, as pointed out on this website at the time, a massive anomaly lay at the roots of the Court's judgment: Vedanta was condemned as "persona non grata", while the welcome mat was laid out for its subsidiary, Sterlite Industries.
At last, one leading newspaper has recognised how crazy this is.
'Vedanta' out, SC admits Sterlite plea
Times of India
16th February 2008
NEW DELHI: What's in a name? Apparently, everything, given the manner in which the Supreme Court has reacted to Norway's expulsion of the Vedanta group from its "investment universe" allegedly for environmental and human rights violations.
While dealing with a controversial mining project in Orissa, SC replaced one subsidiary of the group with another simply because the latter does not bear the name Vedanta.
Referring to press reports on Norway's action against the Vedanta group, SC said two months ago: "We cannot take the risk of handing over an important asset into the hands of the company unless we are satisfied about its credibility."
Accordingly, it said it was "not inclined to clear" the project involving Vedanta Aluminium. * [see note] At the same time, it gave "liberty" on its own to Sterlite Industries, another company of the Vedanta group, "to move this court if they agree to comply with the modalities suggested by this court" for the same project.
That Sterlite Industries is acceptable because of the accident of its not having Vedanta in its name is betrayed by SC's stipulation in its November order: "It is made clear that such an application will not be entertained if made by Vedanta Aluminium (despite being an associate company) or by Vedanta Resources (despite being the parent company)."
Seizing upon this unusual opportunity presented to it by SC, the board of directors of Sterlite Industries passed a resolution three days later agreeing to "substitute" for Vedanta Aluminium in the Niyamgiri Hills bauxite mining project.
The application since filed by Sterlite Industries to take over the mining part of the project came up for hearing on Friday and SC directed the CEC to give its expert comments on it in two weeks.
Interestingly, Sterlite's application proposes that the bauxite mined from Niyamgiri Hills would be supplied to an alumina refinery already set up in the vicinity at Lanjigarh by Vedanta Aluminium. This means that, despite SC's stated misgivings about its credibility, Vedanta Aluminium remains a vital part of the project even if the asset of 660 hectares of forest land on Niyamgiri Hills is going to be "handed over" only to its sister concern Sterlite Industries.
In a bid to be consistent with its own logic, will SC now advise Sterlite Industries to take over the refinery as well from Vedanta Aluminium?
In any event, the proposed cosmetic change ridding the project of the Vedanta tag runs contrary to Norway's indictment of the entire group on November 6 as it was expressly based on an examination of four Indian subsidiaries of Vedanta Resources - Sterlite Industries, Vedanta Aluminium, Madras Aluminium and Bharat Aluminium. The petitioner, Siddharth Nayak, has therefore sought a review of SC's order.
If Sterlite is still given the green signal, it will be returning to a project it had originally transferred to Vedanta Aluminium in 2004. Its application in fact admits that when Vedanta Aluminium was incorporated, it was a 100% subsidiary of Sterlite.
Subsequently, Sterlite's holding reduced to 29.5% and Vedanta Aluminium changed into an associate company of Sterlite as Vedanta Resources raised money in the market.
* The company is, in fact, Vedanta Alumina