Anil Agarwal says Vedanta promoters to keep 50% stake in demerged entities

Anil Agarwal

Vedanta chairman Anil Agarwal has said the group's promoters will maintain over 50 percent stake in each of its demerged entities, the Economic Times has reported.

The conglomerate is planning to demerge its several businesses into separate entities. These businesses — aluminium, oil & gas, power, steel and semiconductors — are part of the Indian subsidiary of the UK-based Vedanta Resources.

"We realised that most of our businesses are sitting under a large banyan tree structure, that is Vedanta. It is better to take them out and allow them to grow in the sun. We are very comfortable with our shareholding levels and have no plans to pare down our promoter stake in any way. Equally, we have no plans to increase our stake in any of the companies that will be demerged," Agarwal was quoted as saying by ET.

Vedanta Resources held over 56 percent stake in Vedanta Ltd at the end of the third quarter. The demerged entities will have the same shareholding pattern, he said.

Agarwal said there is no need for a stake sale to cut debt. The company is sufficiently funded to manage operations through internal accruals.

However, Agarwal added that the group is open to selling its steel business if a "right price" is offered for it. "Our steel business is a profit-making company, with significant assets and great access to markets, and it is doing very well. If somebody were to come across and offer us the right price, which we believe is the true market price of the operations, we can still divest," the report quoted Agarwal as saying.

"The time has come for us to change our operating model. To unlock the next phase of our growth, we need to entrust our businesses to leaders who are empowered, independent and professional. If they want to dilute a small equity, they (management) can go ahead and dilute. They can take on debt. They will constantly be driving their companies towards stronger management, better products, better partners, and greater profitability," Agarwal said, adding the demerger will allow faster decision making.

The company’s shareholders and creditors approved the demerger process of the conglomerate in February. The matter is now set to be heard by the National Company Law Tribunal (NCLT).

"I envision that each of these companies has the potential to become $100 billion enterprises. If you look at where we are headed as a global economy and the demand for such products owing to global growth and the energy transition, these companies and their products are the need of the hour," Agarwal said.

Also read: Vedanta debt to be divided among demerged firms in ratio of assets

Agarwal said he expects the demerged entities to generate $40 billion revenue each over the next five years, with operating profit margin ranging between 30 percent and 35 percent.