Monday, July 24, 2006


Three main dimensions of Vedanta in Orissa

There are three main dimensions of Vedanta in Orissa. Two related to their operations in Lanjigarh and the third is about the proposed Vedanta University.

First and foremost one must make a distinction between the Vedanta company and Vedanta university. The publicly traded Vedanta Company is not making the Vedanta University. The Vedanta Company has not established the $1 billion endowment for the Vedanta University. Mr. Anil Agarwal of Vedanta Company has established the $1 billion endowment from his own personal fortune.

However, since many people will link Vedanta University with the Vedanta Company,
we will briefly touch upon the two issues/controversies. So the two issues related to the Lanjigarh operations are:

(i) The mining lease and related MOUs/agreements that they have with the Orissa government.

(ii) The environmental issues associated with the Lanjigarh operations.

On issue (i) we were able to find couple of documents from 2004 that answers the controversy. We will list excerpts from those documents in another posting.

On issue (ii) supreme court is involved, environmental agencies are involved, etc. So our take on them is to let those take their course. That is how things should be in a democratic country with rules of laws. If Vedanta satisfies all these agencies and the supreme court and then does the operations then we are fine; subject to proper R & R. If not, Vedanta will not be able to mine, and then the controvesy on this issue will vanish.

Now the reason we separate the issues (i) and (ii) from the issue of Vedanta University is that Mr. Anil Agarwal has operations in many countries. If pacifying issues like (i) and (ii) were the reason behind setting up the Vedanta university foundation then he could have split that money and set up many smaller institutions in the various places where he has operations.

So, even if there are some issues with respect to (i) and (ii) there is no doubt that a $1 billion (Rs 5000 crores) endowment is a groundbreaking action in India. Taking into account purchasing power parity it is closer to the actions of Bill and Melinda Gates in setting of their foundation and the recent action of Warren Buffet donating a large chunk of his money to that foundation. Plus no individual person has donated
that much to an university ever, and anywhere in the world. This is an unparallelled act. One most also note that Bll Gates' Microsoft has been introuble in recent years and has been fined by various agencies. That does not make Bill Gates, less of a philanthropist and no one doubts the sincereity of his foundations. Similarly, let us give Mr. Anil Agarwal a chance to create this mega university which will benefit Orissa tremendously.

With respect to the university, some people have questioned the amount of land he has asked for. First, he is paying for the land. If people are willing to sell him the land, then others have no say in it. With respect to the government land others have a say as a citizen. But then they should behave like citizens. If they have elected a government, then they should let the government do its job. Unless the government is doing something illegal, people should not take matters to their own hand beyond throwing the government (or campaigning to throw the government) out in the next elections. Anyhing other than that is "mob rule" and not democracy.

Having said all that does Vedanta need 10,000 acres of land and what will it do with that land? Are they trying to hoodwink the Orissa government in selling them this land at IDCO rates? Are they going to take the land in the name of the university and then do something else?

Following is our take on it. Vedanta aims to have 100,000 students in that university. A university of 100,000 would need a staff of another 10-15 thousand at least. This is the minimum. Anil Agarwal has talked about developing organizations such as Stanford Research Institute which will be associated with the university and collaborate with university faculty and students to research. Such companies can employ another 5-10 thousand people. So we are talking about the land required to house 120,000 people with academic departments, research buildings, swimming pools, stadiums, shopping areas etc. This is almost a small town. In Orissa, this town will be close to the 6th largest town. (The population of various cities and towns in Orissa are: Bhubaneswar+CTC - 15,77,016; Raurkela - 524,473; Brahmapur - 334,006; Sambalpur - 245,797; Puri - 174,218; Baripada - 122,462; Baleshwar - 116, 420; Bhadrak - 100206; Balangir - 92,753; Barbil - 57,959; Bargarh - 69,943; Bhawanipatna - 65,385; Brajarajnagar - 79,976; Dhenkanala - 63,391; Jatni - 56,316; Jaypur - 81,878; Jharsuguda - 80,438; Kendujhar - 56,797; Paradwip - 89,228; Rayagada - 62,313; Sunabeda - 61285)

So is it reasonable to accumulate 10,000 acres for 120,000 people?
10,000 acres = 40.5 sq km i.e an area of 5 km by 8 km.

It may seem a bit big by Indian standards. But for comparison, as mentioned in the Wikipedia, IIT Kharagpur has 2100 acres for 5000 students, 500 faculty, 2200 employees and a total of 15,000 inhabitants. So Vedanta University with 20 times more students but 5 times the land is not that bad. Lets consider Mumbai, where real estate is really expensive. IIT Mumbai has 550 acres for 4,200 students. Vedanta will have 20 times the land for 25 times the student. So it is not that bad.

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