Vedanta’s Strategic Move: Demerger Plans to Create Six Listed Entities
Written by Sanjay Kumar
Vedanta Limited, the conglomerate owned by billionaire Anil Agarwal, revealed its strategic plan to unlock potential value and accelerate growth through the demerger of its business units. This significant announcement was made after a board meeting on September 29, 2023.
The demerger aims to create six independent listed entities, each focusing on a specific vertical. According to Anil Agarwal, Chairman of Vedanta, “By demerging our business units, we believe that we 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 proposed listed entities 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 receive one share of each of the five newly listed companies for every one share of Vedanta Limited they own. This vertical split will grant each independent entity greater autonomy in terms of management, capital allocation, and growth strategies.
Vedanta’s diverse portfolio includes assets in metals and minerals such as zinc, silver, lead, aluminium, chromium, copper, nickel, oil and gas, traditional ferrous materials including iron ore and steel, and power, spanning coal and renewable energy. The company is also venturing into the manufacturing of semiconductors and display glass.
Anil Agarwal emphasized the commitment of each new entity to social responsibility, stating, “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.”
Leadership for these new entities has been designated as follows:
- Vedanta Aluminium: John Slaven, formerly of Alcoa and BHP
- Vedanta Power: Vibhav Agarwal
- Vedanta Base Metals: Chris Griffith
- Vedanta Limited: Arun Misra
In alignment with global sustainability goals, Vedanta commits to achieving net-zero carbon emissions by 2050 and net water positivity by 2030. The company intends to invest $5 billion over the next decade to accelerate this transition to sustainability. Vedanta has already secured 1.8 GW of renewable energy through power delivery agreements across its group companies.
In a related development, Vedanta’s subsidiary, Hindustan Zinc, also announced plans to evaluate corporate restructuring alternatives to unlock growth opportunities. The restructuring aims to create separate entities for zinc, lead, silver, and recycling businesses. This move is designed to enhance shareholder value by optimizing the distinct market positions of these businesses.
Following the announcement, Vedanta’s shares surged by nearly 7 percent to close at Rs 222.50 apiece on the Bombay Stock Exchange (BSE). This marked the best performance of Vedanta’s shares in 2023, breaking a seven-day losing streak. Hindustan Zinc, Vedanta’s subsidiary, also experienced a significant increase, with its shares rising by nearly 6 percent.
The corporate restructuring initiatives by Vedanta and its subsidiaries signify a strategic transformation aimed at unlocking value and fostering sustainable growth in the natural resources sector.
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