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BW Businessworld

Riding The Metal Boom

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In the late 1990s, Anil Agarwal had built himself a respectable mid-sized business empire. His company, Sterlite Industries, was doing well enough, but it was hardly A-league. Also, Agarwal, who hailed from Bihar, was a bit of an outsider in Mumbai and Delhi corporate circles. He had started off as a dealer in scrap, and then graduated to copper rods manufacture, a copper smelter, and also picked up a couple of copper mines overseas. He had also shifted base to London,  one of the world's primary commodity trading centres.

Commodities were not very fashionable in India in the 1990s. There were plenty of industrialists in India who had iron and steel plants. But apart from the AV Birla Group, which had interests in copper and aluminium, there was no big business house in commodities.

In 2000, the BJP-led National Democratic Alliance (NDA) government had drawn up a big disinvestment plan. They wanted to get out of — or at least reduce their role in — the hundreds of PSUs the government owned. Among the companies they wanted to disinvest in were aluminium manufacturer Balco and zinc mining and manufacturing company Hindustan Zinc. Agarwal bid for majority control of both, and won them. 

His timing was amazing. A global bull run was about to start in commodities. China's rise had fuelled a huge demand for all metals and minerals. Agarwal was one of the first businessmen in India to foresee the opportunity. He also had management skills that would help him take over inefficient companies, and make them hugely productive, efficient and profitable. 

Today, Agarwal's commodity empire generates $14 billion in revenues. He has interests in iron ore and oil and gas, quite apart from his aluminium, zinc and copper businesses. And he is hungry for more.

But he has also courted many controversies. Because he is a mine owner, he had come into conflict with environmentalists. When he entered oil and gas, he got into a dispute with the government over royalty payments. He is fighting other battles as well. Meanwhile, commodity prices are softening.

Senior editors Nevin John and Mahesh Nayak have done a detailed analysis of Agarwal's empire — and his goals and the hurdles in his way — in our cover story.

(This story was published in Businessworld Issue Dated 09-07-2012)