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“Vedanta Announces Demerger, Unveiling Six Independent Listed Entities”

The Entrepreneur Bytes Team September 29, 2023 59

Vedanta, led by billionaire Anil Agarwal, has revealed plans to demerge its businesses into six distinct listed entities, a move aimed at unlocking potential value and accelerating growth in sectors like metals, power, aluminum, and oil and gas.

Vedanta Announces Demerger, Unveiling Six Independent Listed Entities

Vedanta Limited, under the stewardship of Chairman Anil Agarwal, has made a significant announcement regarding its strategic restructuring. The conglomerate is set to embark on a demerger journey that will result in the creation of six independent listed entities, a bold move intended to unlock the inherent value within its diverse portfolio of businesses.

The decision, announced after a board meeting, underscores Vedanta’s commitment to maximizing growth opportunities within each vertical of its operations. Anil Agarwal, Chairman of Vedanta, expressed his enthusiasm for the demerger, stating, “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.”

The six separate listed entities resulting from the demerger are as follows:

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

Shareholders of Vedanta Limited will be pleased to know that for every share of the company they hold, they will receive one share in each of the five newly listed companies. This strategic vertical split aims to provide each entity with the autonomy to pursue its growth trajectory independently.

Vedanta has built a diverse portfolio over the years, encompassing metals and minerals such as zinc, silver, lead, aluminum, chromium, copper, and nickel, as well as oil and gas, a traditional ferrous vertical including iron ore and steel, and a robust presence in power generation, including coal and renewable energy. Additionally, the company is venturing into semiconductor manufacturing and display glass production.

Once the demerger is complete, each independent entity will be empowered with the flexibility to manage its resources, allocate capital, and devise niche growth strategies independently.

Chairman Anil Agarwal emphasized Vedanta’s commitment to its workforce, communities, and environmental sustainability, stating, “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.”

Key leadership appointments for the new entities have been announced:

Vedanta Aluminium: John Slaven, formerly of Alcoa and BHP
Vedanta Power: Vibhav Agarwal
Vedanta Base Metals: Chris Griffith
Vedanta Limited: Arun Misra

Vedanta also pledged its commitment to sustainability, vowing to achieve net-zero carbon emissions by 2050 and net water positivity by 2030. To accelerate this transition, the company plans to invest $5 billion over the next decade.

This strategic restructuring move follows Vedanta subsidiary Hindustan Zinc’s recent announcement that it is exploring corporate restructuring alternatives to unlock growth. This includes creating separate entities for zinc, lead, silver, and recycling businesses.

The market responded positively to Vedanta’s demerger announcement, with the company’s shares surging nearly 7 percent to close at Rs 222.50 apiece on the BSE. Notably, this marked the best trading day for Vedanta in 2023. Hindustan Zinc, a Vedanta subsidiary, also saw a significant surge, reaching a day’s high of Rs 317.50, closing at Rs 313.60 on the National Stock Exchange.

As Vedanta embarks on this transformative journey, it aims to harness the potential of each of its distinct businesses, creating value for shareholders and stakeholders alike.

Sources By Agencies