Vedanta mulls group restructuring; separate listing of businesses

Subject to a detailed evaluation, Vedanta says it is the intention that the aluminium, iron & steel, and oil and gas businesses would be housed in standalone listed entities

Billionaire Anil Agarwal's Vedanta Ltd on Wednesday said it is mulling restructuring of the mining behemoth that may include demerger and listing of the aluminium, iron & steel, and oil and gas businesses as standalone entities.

Under the restructuring being evaluated, Vedanta Ltd and three businesses will operate parallelly, chairman Agarwal told PTI.

"All the three businesses have great potential for growth and we think the model being evaluated will provide natural avenues for growth as well as enhance shareholder value," he said.

Giving an illustration, he said a shareholder of Vedanta will hold 4x shares once the plan is approved and implemented - share of Vedanta as well as those in the three businesses.

"This is the global model and if you look at even Indian industry you will find that Hindalco is a separate company and so is Tata Steel. And we can do the same," he said.

Agarwal said Vedanta's board has constituted a committee of directors to evaluate and recommend options to restructure the group.

"The idea is to do it as early as possible. I can't give a timeframe but it will be very soon," he said.

The plan under evaluation is the same as what port-to-energy conglomerate Adani Group did in 2015 - creating separate listed entities for power, mining, gas and transmission businesses.

"The Board of Directors of the Company has decided that, considering the scale, nature, and potential opportunities for various business verticals of the company, the company should undertake a comprehensive review of the corporate structure and evaluate a full range of options and alternatives (including demerger(s), spin-off(s), strategic partnerships etc.) for unlocking value and simplification of corporate structure," Vedanta said in a stock exchange filing.

Subject to a detailed evaluation, it is the intention that the aluminium, iron & steel, and oil and gas businesses would be housed in standalone listed entities, it added.

This is the with objectives of simplifying and streamlining corporate structure, unlocking value for all stakeholders, and creating businesses, which are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships.

"The Board has also appointed various advisors to assist the Board in evaluating the options," it said.

The restructuring would also tailor the capital structure and capital allocation policies based on business-specific dynamics, create distinct investment profiles to attract deeper and broader investor bases; and accelerate emissions reduction and strong ESG practices.

Agarwal said the Board has appointed various advisors to assist in evaluating the options.

It is anticipated that the Board and advisors will complete their evaluation and consider the way forward as soon as practically possible, he said.

"Over the past few years, Group has materially improved the operational performance of the businesses, increased cash flows, reduced debt whilst concomitantly focusing on accelerating investments in energy transition, health and safety, diversity and ESG in general.

"This step, which we announced today, whilst pending a detailed evaluation, is designed to create independent, industry-leading, global public companies, where each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees.

“We will continue to leverage our significant strengths in technology, operations and people to better serve our customers and all stakeholders," he added.