Vedanta Biz Restructuring: Vedanta to demerge biz into six listed entities; check shareholding pattern, other details
- Vedanta Demerger: The demerger of the metals-to-mining conglomerate is planned to be a vertical split. Shareholders of Vedanta will get one share each of the five newly listed entities for every one share of the currently listed entity they own.
Vedanta Biz Restructuring: Vedanta Limited approved the official demerger of its diversified business into six ‘separate’ listed companies, in a move to unlock value for its shareholders. The six independent listed entities consist of Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta base metals and Vedanta Ltd.
The demerger of the metals-to-mining conglomerate is planned to be a vertical split. Shareholders of Vedanta will get one share each of the five newly listed entities for every one share of the currently listed entity they own.
The Anil Agarwal-owned company approved "a pure-play, asset-owner business model" that will result in aluminium, oil and gas, power, steel and ferrous materials, and base metals being demerged and listed separately, according to a regulatory filing by the mining major to the stock exchanges.
‘’The demand for minerals, metals, oil and gas and power is going to grow very rapidly and Vedanta’s businesses are uniquely positioned to service this rising demand and reduce reliance on imports. Vedanta is also foraying into semiconductors and display glass which are of great strategic significance to India,'' said Anil Agarwal, Chairman, Vedanta.
‘’By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical. While they all come under the larger umbrella of natural resources, each has its own market, demand and supply trends, and potential to deploy technology to raise productivity,'' added Agarwal.
Why is Vedanta demerging its diversified biz?
-Simplify Vedanta’s corporate structure with sector focused independent businesses.
-Provide opportunities to global investors, including sovereign wealth funds, retail investors and strategic investors, with direct investment opportunities in dedicated pure-play companies linked to India’s growth story through Vedanta’s assets.
-With listed equity and self-driven management teams, these demergers provide a platform for individual units to pursue strategic agendas more freely and better align with customers, investment cycles and end markets.
-Enable to better highlight, and for the market to more easily value, the remarkable technological advances, environmental stewardship and robust growth stories within Vedanta’s family of companies.
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Here are the details of each of the six listed entities:
Vedanta Aluminium: The Company’s Jharsuguda facility is the largest single-location aluminium smelting facility outside of China, and recently saw its capacity ramp up to 1.8 MTPA. It is accompanied by Bharat Aluminium Company Ltd. (BALCO - a 51 per cent owned subsidiary of Vedanta Limited, taking the total group capacity to 2.4 MTPA)
Vedanta Power: Vedanta Power is one of the largest private independent power players in India and backed by one of the world’s fastest growing power markets and a favourable political climate.
Vedanta Base Metals: The proposed Vedanta Base Metals unit will contain a mix of strong international base metal production assets, growth projects and downstream businesses that feed directly into the supply chain for metals critical to global energy transition.
Vedanta Oil & Gas: Vedanta’s oil & gas is the largest private oil, gas and sweet crude exploration and production company in India, accounting for more than a quarter of India’s domestic crude oil production.
Vedanta Steel & Ferrous: Vedanta’s Iron Ore Business includes Iron Ore Goa, Iron Ore Karnataka, Liberia as well as VAB (Value Added Business). The company has aspirations to more than double annual iron ore production, from assets in India and Liberia to 13MT by 2025.
Vedanta Ltd: The currently listed entity will house the manufacturing of LCD and display glass, the semiconductor business, the stainless business and the stake in Hindustan Zinc.
Also Read: Moody's downgrades Vedanta Resources' corporate family rating to Caa2; outlook remains negative
Earlier today, Vedanta's subsidiary Hindustan Zinc announced that it has authorised the committee of directors to evaluate appropriate corporate restructuring exercise to unlock shareholder value.
Vedanta Ltd will continue to hold 65 per cent of Hindustan Zinc Ltd as well as the new businesses of stainless steel and semiconductor/display. The entire exercise is proposed to be completed in 12-15 months.
Meanwhile, Moody's Investors Service had downgraded Vedanta Resources' Limited (VRL) corporate family rating (CFR) earlier this week from Caa1 to Caa2 over elevated risks of debt restructuring over the next few months. With the current downgrade, the outlook remains negative for the parent company of Vedanta Ltd, as per the global ratings agency.
Moody's has also downgraded to Caa3 from Caa2 its rating on the senior unsecured bonds issued by Vedanta Resources and those issued by Vedanta Resources' wholly owned subsidiary, Vedanta Resources Finance II Plc, and guaranteed by Vedanta Resources.
On Friday, shares of Vedanta rallied over 7 per cent to settled 6.84 per cent higher at ₹222.50 apiece on the BSE.
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First Published:29 Sep 2023, 04:56 PM IST
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