Vedanta Resources may list aluminium subsidiary

Vedanta Aluminium has a $7.8-billion investment plan to increase its fully integrated aluminium smelting capacity.

Billionaire Anil Agarwal-promoted Vedanta Resources plans to list its aluminum business subsidiary Vedanta Aluminum this year. The London-listed holding company of India’s largest diversified mining group is on a listing spree. Another group company, Sterlite Energy, is awaiting approval for its initial public offer (IPO) to raise Rs 5,100 crore.

“Vedanta Aluminium is considering to raise funds for expansion through an IPO,” said an investment banker familiar with the development. “The company can be listed on the London or Hong Kong stock exchanges to get better valuation through exposure to larger investor groups,” the source added.

He did not specify the amount the company is aiming to raise through the IPO. Usually, such offers take three-six months’ time for getting the required approvals and completing all the formalities. Executives at the company did not respond to queries from this paper.

Vedanta Aluminium has a $7.8-billion (nearly Rs 36,000-cr) investment plan to increase its fully integrated aluminium smelting capacity to nearly 2.6 million tonnes per annum (mtpa) by 2012. Upon completion, the company is expected to become Asia’s largest integrated producer of aluminium. It will also become one of the top five aluminium producers worldwide.

The company is expected to commission the second phase of a 500,000 tonne-per-annum aluminium smelter with a 1,215-Mw captive power plant at Jharsuguda in Orissa by the end of the current financial year. Earlier, it commissioned a 1.4-mtpa greenfield alumina refinery project and an associate 90-Mw captive power plant at Lanjigarh in Orissa in 2007.

Vedanta Resources also has its aluminum business under Bharat Aluminum Company (Balco) and Madras Aluminium Company (Malco). Group company Sterlite Industries acquired a controlling stake of 51 per cent in Balco from the government in March 2001. The company is in arbitration talks with the government for the buy-out of the residual government stake in the company.

Malco is another such company that was taken over by the group in 1995.

The group has planned out its primary expansion plan for the base metal under Vedanta Aluminum, in which the group holding company has a 70.5 per cent stake and its subsidiary, Sterlite Industries, owns another 29.5 per cent. It plans to partly finance the $7.8-billion expansion plan through the IPO’s proceeds.