New Delhi / London: Vedanta Ltd on Friday announced its plan to demerge its business units into independent “pure play” companies to unlock value and attract big-ticket investment into the expansion and growth of each of the businesses.
The company’s Board approved a pure-play, asset-owner business model that will ultimately result in six separate listed companies, namely: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, Vedanta Limited, according to a press statement.
The de-merger is planned to be a simple vertical split, for every 1 share of Vedanta Ltd, the shareholders will additionally receive 1 share of each of the 5 newly listed companies.
In addition to this, the company said, "today’s announcement from Hindustan Zinc Limited (HZL, a subsidiary of Vedanta Limited), whereby their Board announced a comprehensive review of its corporate structure for unlocking potential value and intention to create separate legal entities for undertaking the Zinc & Lead, Silver and Recycling business of HZL."
Vedanta is committed to best-in-class ESG practices and has a strong focus on metals critical for the transition to green economy.
The announcement comes at a time when India is forecast to be the fastest-growing major economy for the next several years.
More than ninety percent of Vedanta Ltd’s profits are derived in India.
Demand for commodities is expected to rise exponentially as the country continues to build a world-class infrastructure and strives to achieve aggressive targets for the energy transition which is highly mineral intensive.
The government’s emphasis on self-reliance will provide avenues for rapid growth for Indian companies in the commodities space.
Vedanta has a unique 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 independent management, capital allocation and niche strategies for growth.
The company said the move will also give global and Indian investors the potential to invest in their preferred vertical, broadening the investor base for Vedanta assets.