Under Vedanta's fold, Sesa Goa has transformed into an aggressive, growth-hungry mining company. Its Liberian acquisition could catapult it into the top ranks globally
The Mano river runs along an iron ore-rich region in Liberia in west Africa. The region has attracted much attention from global mining companies, though most have been wary of investing in a country with a recent history of civil war.
Not Sesa Goa. The team led by Managing Director P.K. Mukherjee was keen to acquire a majority share in Western Cluster, which had access to mines along the Mano with deposits of up to a billion tonnes of iron ore. On August 5, 2011, Sesa Goa announced the acquisition.
The Liberian acquisition has now given the Indian mining sector its first global player. The African operation will be Sesa Goa’s single largest facility. This lift in status is not the only change in Sesa Goa in the last five years since Vedanta Resources acquired it from Japan’s Mitsui. From a perennial underachiever, Sesa Goa has transformed itself into an ambitious, growth-hungry miner, even as it has come under scrutiny from social activists and environmentalists.
The acquisition wasn’t an easy one for Mukherjee. He first had to convince Vedanta Chairman Anil Agarwal, who had aired his reservations when a proposal to invest in the region came on the table in early 2011.
He was soon vindicated. Two days after Sesa Goa announced the Liberian investment on August 5, Jigar Mistry of HSBC Securities and Capital Markets mentioned in his report that the deal “brings Sesa’s growth story back…which has off-late hit a roadblock.” As the Sensex dived by 500 points in the next three days, Sesa’s scrip held on, dropping just a solitary point.
Though Agarwal, a master in post-acquisition integration, made sure that the senior management of the company continued, tension among the top rung at Sesa Goa was palpable. “The first two years were tense, they would question everything, including our decisions,” says a senior official on the condition of anonymity. After a Japanese promoter who was happy with a moderate rate of growth and hesitant to take on any new initiatives, Vedanta’s active participation, as the official puts it, “was a culture shock!”
(This story appears in the 02 March, 2012 issue of Forbes India. To visit our Archives, click here.)