Vedanta explores merging Cairn, Hindustan Zinc: Anil Agarwal

Mining baron Anil Agarwal is mulling merging cash-cows Cairn India and Hindustan Zinc into his flagship Vedanta Group firm to create a global natural resources giant to rival Rio Tinto or BHP Billiton.

In an interview to the agency, Agarwal, the ebullient former scrap-metal dealer who became one of India’s most prominent self-made industrialists, said consultants have been appointed to explore if it would make sense to merge the two firms into Sesa Sterlite.

“We have asked a consultant to look at it,” he said.The consultant will look at if it made sense to “keep oil and gas and energy companies separate or merge Hindustan Zinc, merge Cairn, so that we can have a company like BHP. That can be one model. It all depends on shareholders...How value can be created, how smooth. We are open for merger if the recommendation comes,” he said.

Sesa Sterlite, India’s biggest zinc and aluminium maker, is laden with debt, Rs 29,769 crore as on March 31, 2014 while Cairn and Hindustan Zinc (HZL) are its cash generating unit. Sesa holds controlling stake in both the firms. Cairn and HZL account for about 80 per cent of Sesa’s pre-tax earnings.

Insisting that no decision has been taken on merger, Agarwal said Vedanta chief executive Tom Albanese, the former Rio Tinto boss who he hired last year, is on board and whatever recommendations come, decision will depend on that. While his firm’s share buyback in Cairn met with poor response, merger of HZL will depend on a similar proposal. “Cairn should be another mini Exxon or a better Exxon, which is an Indian energy producer, an oil and gas producer which every citizen of this country should be proud of,” he said.