Vedanta to demerge units into six independent listed entities

Vedanta Ltd., the resources and power producer, plans to demerge its various business units into what it calls ‘pure play’ companies to “unlock value and attract big ticket investment” to enable expansion and growth of each of the six businesses.

The company’s board on Friday approved a ‘pure play asset owner’ business model that will lead to creation and separate listing of six companies namely Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Ltd. 

“The demerger is planned to be a simple vertical split, for every 1 share of Vedanta Ltd., the shareholders will additionally receive one share of each of the 5 newly listed companies,” the company said in a regulatory filing.

“This is an exciting announcement for Vedanta and India,” Chairman Anil Agarwal was quoted as saying in the statement. “By demerging our business units, we believe that we will unlock value and potential for faster growth in each vertical,” he added.

“While they will come under the large umbrella of natural resources, each has its own market, demand and supply trends and potential to deploy technology to raise productivity,” Mr. Agarwal observed. 

The company said once demerged each independent entity would have greater freedom to grow to its potential and true value via an independent management, capital allocation and strategies for growth. 

“It will also give global and Indian investors potential to invest in their preferred vertical, broadening the investor base for Vedanta assets,” the company said.

The company’s metals, minerals and allied business include zinc, silver, lead, aluminium, chromium, copper, nickel, oil & gas, iron ore, steel and power. Recently, it had announced a foray into manufacturing semiconductors and display glass.

In a related development, the board of Hindustan Zinc Ltd., a wholly owned subsidiary, has announced a comprehensive review of corporate structure ‘for unlocking potential value’ and intention to create separate legal entities for undertaking zinc & lead, silver and recycling businesses. The company’s board authorised a committee of directors to evaluate and recommend options and alternatives.