Vedanta says won't rejig corporate structure, announces 30% of PAT as dividend

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Mining major Vedanta Ltd on February 8 said it has dismissed the plans to rejig its corporate structure, after completing its reorganisation review. The company has arrived to the conclusion that its current structure is optimal, it informed the stock exchanges.

The regulatory filing also noted that Vedanta would be distributing a minimum of 30 percent of the attributable profit after tax (excluding profits of HZL) as dividends.

Notably, Vedanta had, in November last year, decided to undertake a review of the company's corporate structure and evaluate a range of options, including demerger or spin-off of its existing businesses.

Based on the inputs received from experts and advisors, the company has decided against adopting the above plans, it said.

"The Board of Directors concludes that the current structure is optimal and is commensurate with the current scale and its diversified lines of businesses. Therefore, the company will not undertake any corporate restructure including demerger/spin off etc. and will continue with its existing structure," Vedanta said.

Vedanta further informed the stock exchanges that its capital allocation policy will be based on a "consistent, disciplined, and balanced" allocation of capital with long term balance sheet management.

The company will maintain optimal leverage ratio (Net Debt/EBITDA) at consolidated level, it said.

"Vedanta Limited’s Dec’21 consolidated leverage ratio is 0.7x, which is amongst the best compared to peer group. During normal business cycles, the company will maintain this ratio below 1.5x at consolidated level," the company noted.

Overall capital allocation will maximise total shareholders returns (TSR), it further said.

Vedanta also noted that its capital expenditure will include both growth and sustaining capex.

The substantive amount of this outlay will be around existing lines of operations with focus on volume augmentation, cost reduction, ESG and
moving to value added products, which command higher margins, it said.

Sustaining capex will be tracked on per ton basis and managed through annual operating plan exercise, Vedanta added.

The company claimed that its capital allocation policy will be the "primary guiding factor" and "we will focus on organic growth".

Vedanta will "consider select mergers and acquisitions", within the overall capital allocation framework, the mining sector behemoth said, adding that it has "proven expertise and successful track record of turning around acquired businesses".

The company will participate in divestment program which has strategic fit with the portfolio, it further noted.