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4-Traders Homepage  >  Equities  >  NATIONAL STOCK EXCHANGE OF INDIA  >  Cairn India Limited    CAIL   INE910H01017

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Cairn India : Chairman Vedanta, featured on the cover of Business India

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05/23/2017 | 11:36am CEST

RNI No.35850/80; Reg. No. MCS-123/2015-17; Published on: Every alternate Monday; Posted at Patrika Channel Sorting office, Mumbai-400001 on every alternate Wednesday-Thursday

`50

May 22-June 4, 2017

n ONE BELT ONE ROAD

n MODI'S THREE YEARS

n BANKING: PERFECT STORM

n AYURVEDA VERSION 2

Anil Agarwal Founder-Chairman Vedanta Plc An Indian Giant Cairn's merger into Vedanta creates India's No 1 natural resources company

s a n j a y b o r a D e

Busines s i ndi a u t h e m aga z i n e of t h e cor p or at e wor l d Cover Feature

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Cover Feature

Busines s i ndi a u t h e m aga z i n e of t h e cor p or at e wor l d

The natural

resources billionaire

t

here are stories told of the 65-year-old anil agarwal, group chairman, Vedanta resources plc (listed in london) & chairman

emeritus of its indian arm, Vedanta ltd. they say, in his early 20s, when he first came to mumbai from patna, he barely understood english. the only two words he knew were 'yes' and 'no'. however, agarwal relocated abroad in 2003 and, as an nri living in london (as he does these days), he has picked up a lot more of the lan- guage, and can speak with passion on the subjects closest to his heart - natural resources and the building of the nation, india.

But, one word he hasn't added to his vocabulary is 'maybe'. this anec- dote exemplifies his steely vision and determination. nowhere has this been more in evidence than in his takeover and turning around of a slew of companies, including the latest, cairn india. a strong believer in the india growth story, agarwal's mantra is to use every opportunity that has potential to create employment and eradicate poverty. he envisions an india self-reliant on its energy needs, export-oriented, sustainable and a socially responsible country.

and he has done it, leading from the front, creating a R71,721 crore (post merger) conglomerate, which is one of the fastest-growing diversi- fied global metal and mining majors, with interests in aluminium, zinc, copper, lead, silver, iron ore, oil & gas and energy. the group has opera- tions in india, zambia, ireland, aus- tralia, south africa, liberia, the uae and namibia.

"Vedanta, i believe from my heart, is a company with a 'purpose'; it's

Anil Agarwal puts India on the global natural resources map, with Vedanta among the top 10 producers

not for satisfying personal needs," says agarwal, who has a passion for mother earth. "if you look at how america was built, and i got this from the discovery channel, it doesn't show any politicians, scientists or inventors, but they talk about the industrialists, who have built amer- ica - the likes of john d. rockefeller,

j.p. morgan, henry ford, cornelius Vanderbilt and andrew carnegie. they speak about how their indus- trial innovations and business empires revolutionised modern soci- ety. these are the people, discovery channel says, who have built amer- ica, which was nothing. india has a huge culture and history of centu- ries. america had nothing and they built the foundation on these five people. so, i find india is probably in the very same situation - you need a political leader; you need a leader who can take the country's trade, industry and infrastructure forward. now is the time for india".

"earth is important; its contribu- tions are above the ground, as also below the ground. above the ground is agriculture. i have undertaken this mission to explore natural resources, which are below the ground. they are also important and they help to eradicate poverty and build the

nation," says agarwal candidly. "don't we have the right to use our own oil, gold, copper, fertilizer, etc?" he asks. "we have to look at these in the swadeshi perspective. so, this is the genesis of my dream, to become a natural resource player. and, trust me, whatever i do, i do with a 'pur- pose'. i tell all my executives: you must have a feeling about what Vedanta is doing, it is for a specific purpose, it is for our society. if there is anything in what we are doing, you feel, will not be good for soci- ety, please pause to rethink," exhorts agarwal, while elaborating on the philosophy that has guided him.

Dream into reality

agarwal's dream from the very begin- ning was to become a global natural resource player. "you know we are the only mining and natural resource company in india. everybody feels proud to have a world-level natural resource company originating from his country. bhp Billiton says 'i am from australia', axon says 'i am from america', Vale says 'i am from Bra- zil', anglo american says, 'i am from south africa'. now, indians can say, here is Vedanta, which is from india. we want to have our dna tested to prove that we are an indian com- pany and are proud to be an indian company," he adds. agarwal has now completed the merger of Vedanta with cairn, a company he bought in 2012, which was a major step in the direction of becoming a full fledged natural resource player.

on 15 may 2017, the merged entity has come out with its cor- porate scorecard for the year ended march 2017. while the revenues are up from R63,920 crore to R71,721

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Cover Feature

Busines s i ndi a u t h e m aga z i n e of t h e cor p or at e wor l d

crore, the profit after tax has soared by three times to R10,022 crore, as against the previous year's R3,553 crore. the other key financials show progress too - ebidta (R21,437 crore), cash (R63,471 crore) and net debt (R8,099 crore). today, with a market cap of R1,14.308 crore, it is the eighth largest private sector industrial unit in india (excluding banks and tech companies) and the first to publish a tax transparency report.

"the merger with cairn india transforms Vedanta ltd into a diver- sified natural resources powerhouse, anchored in india. the combined entity truly reflects our strong, diver- sified, low-cost portfolio with indus- try-leading volume growth from our well-invested assets. we are looking forward to an exciting 2017-18 and future years, with all our businesses operating at full capacities and cost efficiencies," explains navin agar- wal, chairman, Vedanta limited, who is the younger brother of anil.

"our strategic focus, to ramp up production across the portfolio in zinc, aluminium, power and iron ore businesses throughout the year,

Navin: the operations man

has supplemented revenue growth. in particular, record production lev- els at zinc and aluminium were well- timed in an environment of strong supply side pressures on both com- modities. our cost management ini- tiatives have helped us deliver strong

returns for all our shareholders," adds thomas albanese, ceo, Vedanta ltd. albanese hails from rio tinto, where he was ceo from march 2007 to jan- uary 2013.

"in less than three decades, agar- wal has managed to build a diversified

Exploration

I

n one of the biggest buy- outs for a domestic com- pany, Vedanta acquired Cairn India in 2012. The UK Cairn Plc had a business model of dis- covering oil, putting the fields in production and then hav- ing captured the growth, sell- ing to focus on new areas for

exploration

At the time of the acquisi- tion, Cairn was at a nascent stage of growth. One of the key projects Vedanta initiated was the commencement of the enhanced oil recovery (eor) project for the most prolific Mangala field. This project was planned ahead of schedule, with the management team identifying the potential for chemical eor at an early stage of development. The Man- gala eor project is the largest polymer programme in the

world. The first polymer injec- tion at the Mangala field was achieved ahead of schedule in October 2014. Today, over 400,000 barrels of polymerised liquid are injected in the field and the Mangala eor produces about 56 kboepd (8 per cent of domestic production). Buoyed by the success of the Mangala eor project, the management team is pursuing polymer flood execution in the Bhagyam and Aishwariya fields.

Over the course of the six years since acquisition, the gross production volume from the Rajasthan field has increased from 100,000 bar- rels of oil or oil equivalent per day to 160,000 per day in 2016-17.

Focussing on rapid growth is in Vedanta's dna. The group was keen to unlock the vast

hydrocarbon potential of the Rajasthan block. For this, one of the key hurdles was the non- clarity on exploration, and rev- enue share, in a development phase of the block. The gov- ernment, in 2013, clarified the exploration policy, paving the way for Cairn's expansion. In order to establish the full potential of the block, Vedanta invested a capex of over $600 million for exploratory and appraisal wells and seismic data acquisition. The success- ful exploration programme added 1.7 billion barrels of oil or oil equivalent of hydro- carbon potential with 13 new discoveries.

These new discoveries posed a fresh set of challenges for the management team to monetise. However, for Vedanta, this only opened up a window of opportunity - to replicate the success of drilling

technologies in North Amer- ica. The management team acted swiftly to initiate a two- pronged strategy to develop the tight oil & gas formations.

The Vedanta group initi- ated an ambitious appraisal programme for the tight oil discoveries focussing on Barmer Hill. The group invested more than $100 mil- lion in order to test new frack- ing technology and assess the hydrocarbon potential. At Barmer Hill, eight horizontal wells were drilled. Every well had about 10 fracs and, on an average, 2,00,000 pounds of proppants were infused for these fracs. The 'limited entry technique' of fracturing using multiple perforations in sin- gle stage and precise reservoir targeting has increased res- ervoir coverage by almost 30 per cent. Vedanta pioneered in introducing such fracking

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Cairn India Limited published this content on 23 May 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 23 May 2017 09:35:23 UTC.

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Financials ( INR)
Sales 2017 91 165 M
EBIT 2017 12 822 M
Net income 2017 24 313 M
Finance 2017 51 304 M
Yield 2017 1,78%
P/E ratio 2017 21,09
P/E ratio 2018
EV / Sales 2017 5,31x
EV / Sales 2018 4,36x
Capitalization 535 275 M
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 6
Average target price 229  INR
Spread / Average Target -20%
EPS Revisions
Managers
NameTitle
Sudhir Mathur Chief Executive & Financial Officer
Omkar Mihir Goswami Independent Non-Executive Director
Priya Agarwal Non-Executive Director
Tarun Jain Non-Executive Director
Arun Arora Chief Communications Officer
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CAIRN INDIA LIMITED8 351
CONOCOPHILLIPS-11.25%54 154
EOG RESOURCES INC-13.93%50 250
CNOOC LTD-10.88%48 851
OCCIDENTAL PETROLEUM CORPORATION-14.90%46 348
CANADIAN NATURAL RESOURCES LIMITED-9.29%37 382