We choose difficult businesses, but they are also the right businesses to be in,” says Anil Agarwal.Few sectors test that conviction like natural resources, where fortunes are shaped as much by commodity cycles and regulation as by operational execution. Agarwal, the founder of the Vedanta Group, has spent decades navigating both. Now, after restructuring Vedanta Ltd into five separate listed companies, he is preparing for his next big wager—a $20-billion investment plan over the next three-five years, funded largely through internal cash generation. Based in London, he makes time in Mumbai for a chat with Business Today on the eve of public listing of the new companies. This follows a demerger of Vedanta Ltd, the listed entity that he heads as the Non-Executive Chairman. The stated rationale is unlocking shareholder value, though reducing debt at Vedanta Resources—the holding company—is equally critical.Agarwal is known for his ambition and tenacity. It’s no different this time. He believes each of the five listed entities—Vedanta Aluminium, Vedanta Iron & Steel, Vedanta Oil & Gas, Vedanta Power and Vedanta Ltd—can become a $100-billion revenue company.The ambition is underpinned by a portfolio of market-leading businesses. Hindustan Zinc Ltd (HZL) is the world’s largest integrated zinc producer and commands nearly 74% of India’s primary zinc market. Vedanta Aluminium is India’s largest aluminium producer and the third-largest globally, backed by a fully integrated operating model. Vedanta Oil & Gas is the country’s largest private sector crude oil producer with a strong asset base, while Vedanta Power is the fifth-largest private thermal power producer. Vedanta Iron & Steel, meanwhile, benefits from strategically located assets near key raw materials and ports, while its copper business has a diversified asset base across markets where demand remains strong. The strengths of these businesses are complemented by an improving commodity cycle.Can Agarwal succeed at his new gambit, considering that he is in a highly cyclical business that is also full of regulatory minefields?A tough code to crackNatural resources entail patience, perseverance and the ability to accept bad news at any point. “For any business here, there is a ten-year gestation. One just has to be at it,” says Agarwal.Despite the complexity of the business, Agarwal speaks in simple, direct terms. He agrees there is a demand-supply gap. “That is our sweet spot. Not many people can come in and play this game,” he says. To highlight the point, he talks about metals. “Globally, there are no more than 15-20 players. India has five-six (metal players). The fact is that not all metal companies last.”Agarwal, on multiple occasions, through the conversation, emphasises how India competes well in the global markets. “Just look at our costs in aluminium, zinc, steel, power and steel. Nobody can beat us on any of this,” he says.Agarwal believes natural resources can easily propel a nation’s growth. “We have seen how the US, Middle East and Australia have gone about it. Our time has come,” he says quite firmly.According to Rakesh Arora, Managing Partner, Go India Advisors and a long-time industry tracker, the decision to demerge Vedanta Ltd could be driven by debt at Vedanta Resources. That has reduced from $8.9 billion (in FY22) to $4.7 billion at the end of FY26. Arora thinks that is “meaningful deleveraging”, even as Vedanta Ltd’s own net debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio (the ability to pay off debt through its earnings) is at 0.95x and below 1x for the first time in years. It was 1.61x in FY24 before dropping to 1.2x in FY25. “The pressure valve has clearly been released. The demerger’s role in the debt story is now forward-looking rather than being crisis-driven,” he says.Now, five independent listed entities give them more options to monetise stakes, as opposed to being part of a larger conglomerate. “Selling 5% of Vedanta Aluminium or Hindustan Zinc is far easier than selling 5% of a diversified Vedanta,” says Arora. To him, holding company debt is a structural overhang, and the demerger is the best way to retire it.For Vedanta Resources, dividends from the five companies are critical for debt servicing. In short, the companies doing well will help reduce, even eliminate, the debt.Getting to the coreVedanta has kept a close watch on its cost structure, which has helped it improve margins and better withstand industry shocks. “Today, India competes in the world market. Be it aluminium, zinc, silver, power or steel, we have the lowest cost,” says Agarwal.Nickel, he points out, is not made in India. He plans to set up a phosphate fertiliser plant in Rajasthan. That is logical for two reasons. Rock phosphate, a key raw material for fertiliser production, is mostly produced in Rajasthan. Additionally, zinc smelting generates sulphur dioxide, which can be converted into sulphuric acid, a critical input for fertilisers.Costs have been a key driver of Vedanta’s growth. Agarwal credits much of that to the ability to get the most out of technology. This is most evident at HZL, which is among the world’s lowest-cost zinc producers. Its strategic advantage comes from high-grade mines and captive power. According to Arora, the cost of production was $903 per tonne in the last quarter of FY26, around 30-35% below the global average. The launch of EcoZen (low-carbon zinc produced entirely using renewable energy) has added a premium layer to its realisations. The zinc business continues to deliver EBITDA margins of over 50%.In FY26, the aluminium business reported costs of $1,752 per tonne, the lowest in five years. At Bharat Aluminium Company (Balco), costs fell 23% year-on-year (from $2,313 to $1,792 per tonne), driven by the allocation of captive coal. Vedanta’s vertically integrated model and ownership of quality mineral assets underpin its cost advantage.Raj Gaikar, research analyst, Samco Securities, says cost leadership is uneven across businesses. “It is emphatic in zinc, solid in aluminium and less proven in steel and power,” he says. The demerger’s role in the debt story is now forward-looking rather than being crisis-driven. Selling 5% of Vedanta Aluminium or Hindustan Zinc is far easier than selling 5% of a diversified Vedanta.-RAKESH ARORA,MANAGING PARTNER, GO INDIA ADVISORSScale has a role to play. For instance, HZL has about 75% of the primary market and is among the largest integrated zing companies globally. In the case of aluminium, Vedanta is up against Hindalco (its strength lies in downstream and the global Novelis business), while Nalco has an advantage in both raw materials and costs, though it scores low on scale.Vedanta enjoys the clearest scale and low-cost advantages in aluminium production. A report by Kotak Institutional Equities on Vedanta Aluminium, published after its listing, says it has 62% share by capacity in India. In a global context, according to the report, Vedanta’s capacity of around 2.9 million tonnes per annum (mtpa) places it among the top producers worldwide. “It is poised to be the third-largest player in the world (ex-China) after the commissioning of around 0.4 mtpa Balco capacity. This would place it behind only Rusal (4.1 mtpa) and Rio Tinto (3.4 mtpa) among global ex-China aluminium producers,” says the report.But one area of concern is oil and gas, and it became evident in FY26, with a 16% production decline in its flagship Rajasthan block. Arora believes it is a problem that no cost efficiency can offset. The business also had to deal with the government rejecting Vedanta’s application for extension of the contract in Gujarat’s Cambay basin block. “In this segment, ONGC’s scale and government relationships remain decisive advantages, and Reliance is the dominant private sector operator. The strategic opportunity from new OALP (open acreage licensing policy that now allows companies to freely select and apply for exploration blocks) is real but is a 2028-30 story at the earliest,” he says.Breaking it downThe big question now is the $20-billion capex planned over the next three to five years across businesses and the ability to fund that through internal cash generation. “It is a genuine stretch, though not uniform across the group. It has a tilt towards oil and gas and aluminium at about $4 billion each,” says Gaikar.Aluminium and zinc generate cash through cycles, making internal funding possible. “However, oil and gas must arrest field decline (depletion) before it can self-fund a ramp-up, while power and steel offer thin margins relative to their ambitions,” he explains. The remaining $12 billion capex would include $2.5 billion in power, $2 billion in zinc and silver, and $7.5 billion in iron ore, steel and other businesses.According to Arora, the $20-billion translates into $4-7 billion per year. As things stand, internal cash generation, according to Arora, covers the capex target for the current fiscal. “For FY28-30, one would assume the capex will be driven by commodity prices and internal accruals. Apart from the alumina expansion in India, along with backward integration into bauxite and coal and zinc expansion in Gamsberg (the last one is in South Africa), most of the other projects are on the drawing board,” he says.However, much will depend on how the commodity cycle plays out. “A 10% rise in aluminium prices adds $641 million to EBITDA—nearly double the $278 million from zinc and well above the $38 million from oil. Vedanta is overwhelmingly an aluminium and zinc player,” says Arora. The biggest tailwind will come from the current commodity cycle, where the outlook remains largely positive. “For Vedanta, it looks good, and there is a clear upside on white metals and ferrous,” says Deven R Choksey, Chairman and MD of wealth management and investment advisory firm DRChoksey Finserv.Oil and gas is already a significant business. Through Cairn Oil & Gas, it accounts for about 25% of India’s crude oil production. While state-run players such as ONGC and Oil India are larger, those tracking the sector say Vedanta’s advantage lies in quicker decision-making and greater operational agility. The company is also looking to expand the business over the next few years. The biggest tailwind will come from the current commodity cycle, where the outlook remains largely positive. For Vedanta, it looks good, and there is a clear upside on white metals and ferrous.-DEVEN CHOKSEY,CHAIRMAN AND MD, DRCHOKSEY FINSERVThe renewable energy story, says Choksey, can bring the company a huge upside. A recent directive has mandated 20% domestic content in battery storage projects getting financial support from the government. “It is a huge plus for Vedanta since demand for nickel and manganese can really take off,” he explains.If Agarwal is willing to back a big idea with capital, he is equally willing to step away when it no longer fits his priorities. In September 2022, Vedanta announced a $19.5 billion semiconductor joint venture with Taiwan’s Foxconn. The plant was to start production in Gujarat in two years. Less than a year later, Foxconn, in a statement, said, “it will not move forward on the JV with Vedanta”, without citing any reasons. Reflecting on that, Agarwal says semiconductors are futuristic like critical minerals. “The potential is huge, and we looked at it from the base and wanted to set up a foundry (where integrated circuits and microchips are manufactured). We realised there is a lot of work to be done in our existing businesses and dropped the idea,” he elaborates.There is no regret in his voice about what might have been. “I really don’t think of it. The focus is very clearly on the five companies and what we can do with natural resources,” adds Agarwal.What lies ahead?There is a background to the recent demerger of Vedanta Ltd. In May 2020, its board approved a proposal of the promoter, Vedanta Resources, to delist the company. Through a postal ballot, over 90% of shareholders gave the green signal.When the process began in October, it could not be completed after the company fell short (by 7%) of the threshold of 90% shares tendered by public shareholders. All this was in the midst of the pandemic when valuations across the market took a hit.“The shareholders were unhappy with the delisting price (Rs 87.5 per share when the stock traded at Rs 79.6) and voted against the proposal. The subsequent metals upcycle and recovery of the global stock market meant the delisting would have occurred at lower valuations,” says Shriram Subramanian, Founder and Managing Director of InGovern Research Services, a corporate governance advisory firm.Since then, a lot has changed, driven by a desire to reduce the debt of Vedanta Resources, which is the rationale behind the high dividend payout from its Indian subsidiary. “One result of the demerger is that, in a worst-case scenario where a substantial portion of debt needs to be repaid at Vedanta Resources, the promoters can sell Vedanta Resource's shareholding in any one or more of the demerged companies,” he explains.As India steps up investments in manufacturing and infrastructure, Vedanta's businesses are well placed to benefit. The demerger has also given the group a simpler structure at a time when reducing debt remains a priority. The bigger test, however, lies in execution. Delivering on a $20-billion investment plan while maintaining cost leadership across businesses will determine whether Agarwal's latest bet pays off. It is a story that investors will be watching closely. @krishnagopalan