Mumbai: Anil Agarwal, chairman of Vedanta Resources Plc., announced on Tuesday that he was splitting the group into three commodity-focused segments: copper, zinc and lead; aluminium and energy; and iron ore.
The move didn’t find favour with investors, with shares of two of the group’s three metal companies listed here, Sterlite Industries (India) Ltd and Hindustan Zinc Ltd, falling significantly. Shares of Sterlite fell 7.5% to Rs575.70 each and those of Hindustan Zinc 3.15% to Rs 549.35.
Shares of the third company, Madras Aluminium Co., or Malco, rose 17.37% to Rs214.20 each.
New plans: Vedanta Resources chairman Anil Agarwal. Abhijit Bhatlekar/Mint
The London Stock Exchange-listed Vedanta is the holding company for the metal magnate’s commodity business. The effective date for the multi-step scheme, which involves several share swaps is 1 April 2009.
The complicated restructuring will “align the opportunities of respective sectors to go to the respective companies,” Agarwal said.
The scheme will see Sterlite transferring its aluminium and energy business to Malco which is being rechristened Sterlite Aluminium Ltd. Sterlite shareholders will get seven shares in Malco for every four they own. Sterlite will also issue equity shares to Malco shareholders in the ratio of one share (face value: Rs 2) for every 51 they hold.
Sterlite shareholders will also get one share in THL KCM Ltd, a subsidiary of Vedanta for every share they own. Vedanta group owns 80% of Malco and 62.47 % of Sterlite.
“This restructuring will unlock value,” said Agarwal.
“We believe that the resulting structure will bring material improvements to our organization and improve focus and transparency across our businesses,” Agarwal said.