Vedanta Resources delisting from LSE to complete by September end

With Vedanta Resources engaged in delisting process, which it expects to complete by September end, the newly-appointed Chief Executive Officer (CEO) Srinivasan Venkatakrishnan has already chalked out a plan for the entity.

“After delisting, which is a simple process and will take only another three-four weeks, our focus would be on sweating all our assets across businesses in Vedanta and also make sure that the planned investments take place properly,” Anil Agarwal, founder and chairman of Vedanta Resources, told Business Standard in a telephonic conversation after the announcement of Venkatakrishnan’s appointment.

Vedanta Resources is the holding company of Vedanta Ltd with 51 per cent stake in the latter. Vedanta Ltd is one of the largest diversified natural resources firms in the world having presence in crude oil, power, copper, aluminium, zinc, lead, and iron ore. 

In July, Agarwal announced his plans to delist the flagship firm Vedanta Resources from the London Stock Exchange after buying out 33.5 per cent of non-promoter shareholders for about $1 billion. Currently, Agarwal’s Volcan Investments holds 66.53 per cent of Vedanta Resources and has made a cash offer for 825 pence a share.

Vedanta Ltd plans to invest around $8 billion (about Rs 560 billion) in various business verticals over the next three years. The company aims to fund this capex largely via internal accruals at a time when its cash profit front post dividend payouts is less than half the planned capex for every year over the three-year period.

“Operations of Vedanta Ltd are on the correct side of the cost curve and as you pull down cost, the cash flows will improve,” Venkatakrishnan said. “The key focus will be on keeping costs in control and thereby be the highest margin generator. Ongoing cost optimisation and operational efficiency improvement are also in place and along with Brownfield expansions, the company will get the desired dividends,” he added.

A $8 billion (Rs 560 billion) capex for Vedanta Ltd over three years would be Rs 186.6 billion of capex every year. However, since two years, Vedanta has made hefty dividend payouts to its shareholders, which rose from Rs 9.6 billion in 2013-14 to Rs 78.8 billion in 2017-18, bringing down its cash profits.

Through the dividends received from Vedanta Ltd, the London-listed holding company, has been paying its debt which it will continue to even going ahead, the officials said.    

Meanwhile, Agarwal ruled out any plans of Volcan Investments, the family trust of Vedanta Resources, raising stake in Anglo American South Africa. Currently, the trust holds 21 per cent stake in the latter. “Neither there is a plan to raise equity in Anglo American, nor any merger idea with Vedanta Resources at the moment,” said Agarwal. 

Volcan was said to be considering a plan to acquire control of Anglo American South African business by merging Vedanta Resources with the South African unit via a share swap.