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Vedanta considering separate entities for businesses, says Anil Agarwal

'Investors like pure play,' says billionaire chairman of company that has varied interests

Vedanta

Signage for Vedanta Resources Ltd. is displayed at the company's office building in Mumbai, India, on Thursday, March 6, 2020. Photographer: Kanishka Sonthalia/Bloomberg

Amritha Pillay Mumbai

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Vedanta Ltd will explore options to create independent entities for some or all of its businesses, said Anil Agarwal, chairman of the India-listed company.

It did not disclose further details, including the timeline and structure of the proposal.

In a statement to the BSE, Vedanta called it an exercise aimed at unlocking stakeholder value. 

“I have been told that investors like pure play,” Agarwal told shareholders in a video message released late Thursday evening.

Agarwal said, “We have presence across businesses that include oil and gas, aluminium, integrated power, copper, zinc, silver, lead, iron and steel, nickel, ferro alloys and semiconductor display glass. I asked my advisors and my people to look if we can make all these products or some products independent,” said Agarwal.

He added, “Independent management and the leadership can grow this business to the highest level — they remain focused to create value and develop several other products within this product.”

Vedanta told BSE in a disclosure: “At this point, it is just a thought and basis of the feedback. Progress made in this regard, if any, shall be subject to due diligence, requisite approvals and regulatory compliances / disclosures as may be necessary.”
Hinting at the option of listing businesses as separate entities, Agarwal said:

“This means that if you have one share of Vedanta Ltd, you will have many shares of other companies. People will have an opportunity to invest in different areas. Some international companies want to invest in a particular area and they will get that opportunity.”

If successful, Vedanta will join the list of conglomerates such as Raymond, ITC and Reliance Industries, to have undertaken a de-bundling exercise in recent times.

Mukesh Ambani-led oil-to-telecom group recently listed its financial services arm Jio Financial Services.

In July, ITC’s board approved a demerger of the company’s hotels business into a separate entity that would be listed pursuant to a scheme of arrangement.

In April, the Raymond group initiated the process to create two independent net debt-free listed entities for its lifestyle and real estate businesses.

This is not the first time that Agarwal has considered changing the ownership structure of his companies. In 2020, Vedanta Resources, the parent company of Vedanta Ltd, proposed a delisting for the Indian entity. The proposal, however, was withdrawn in October the same year.

The promoter company had then said, “The bid to delist has not been successful. We saw enthusiastic participation by our shareholders. This took us within striking distance of our goal, with a shortfall of only 7 per cent.”

The parent company is also attempting to trim its debt. In May, Vedanta Resources said it repaid bonds worth $1.4 billion that were due in May and June. This reduced its gross debt to $6.4 billion from $7.8 billion at the end of March this year.

“There is no indication if the exercise to create independent entities is to free up funds for the promoters. With no further details, it is difficult to comment at this stage,” said an analyst.

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First Published: Aug 25 2023 | 2:54 PM IST

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