Vedanta announces demerger to split business into six listed entities

Vedanta demerger LIVE updates: Company announces demerger to split business into six listed entities

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Billionaire Anil Agarwal-owned Vedanta Limited on September 29 announced creation of independent verticals through demerger of underlying companies, mainly its metals, power, aluminium, and oil and gas businesses to unlock potential value.

“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,” Anil Agarwal, Chairman of Vedanta, said in a statement after the board meeting.

As stated, the company plans six separate listed entities, namely:

• Vedanta Aluminium
• Vedanta Oil & Gas
• Vedanta Power
• Vedanta Steel and Ferrous Materials
• Vedanta Base Metals
• Vedanta Limited

Vedanta added that the de-merger is planned as a vertical split, for every 1 share of Vedanta Limited, the shareholders will additionally receive 1 share of each of the 5 newly listed companies.

Source: Vedanta

The Anil Agarwal-led conglomerate has a portfolio of assets among Indian and global companies with metals and minerals - zinc, silver, lead, aluminium, chromium, copper, nickel; oil and gas; a traditional ferrous vertical including iron ore and steel; and power, including coal and renewable energy; and is now foraying into manufacturing of semiconductors and display glass.

Once demerged, each independent entity will have greater freedom to grow to its potential and true value via an independent management, capital allocation and niche strategies for growth, the company further stated.

Commenting on the demerger news, Anil Agarwal, Chairman of Vedanta, said,“In line with Vedanta’s ethos, each company will continue to retain a strong commitment to the well-being of our workforce, our communities and our planet. Even as we move to new ways of running our businesses, we will remain steadfast to transform for good.”

Vedanta Aluminium will be run by John Slaven, formerly of Alcoa and BHP. Vedanta Power will be run by Vibhav Agarwal. Vedanta Base Metals will be run by Chris Griffith. Vedanta Limited will be run by Arun Misra.

"The new companies will remain committed to achieving net-zero carbon emissions by 2050 and net water positivity by 2030 with the aims to spend $5 billion over the next 10 years to accelerate this transition. In the process of transitioning to net zero we already secured 1.8 GW of Renewable Energy through power delivery agreement across our group companies," said Vedanta.

Earlier today, Hindustan Zinc, a subsidiary of Vedanta had informed the stock exchanges that its board has decided to evaluate corporate restructuring alternatives to unlock growth. The idea behind the restructuring is to create separate entities for zinc, lead, silver and recycling businesses.

With the possible restructuring, the company plans to unlock value for shareholders by creation of businesses which are positioned to better capitalise on their distinct market positions and deliver long-term growth. Along with that, the restructuring will also aim to set up an appropriate capital structure and capital allocation policies, uniquely to each business.

Shares of Vedanta on September 29 soared nearly 7 percent to end at Rs 222.50 apiece on BSE. The stellar gains not just helped shares of Vedanta snap a seven-day losing streak but also see its best day in 2023 so far.

Its subsidiary, Hindustan Zinc surged nearly 6 percent to its day's high of Rs 317.50. At 1.52 pm, shares of Hindustan Zinc were trading 5.25 percent higher at Rs 313.60 on the National Stock Exchange. The scrip closed at Rs 308.25 on September 29.