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vedanta: Vedanta looks to rejig group, list businesses separately


NEW DELHI: Billionaire Anil Agarwal-led mining company Vedanta Ltd on Wednesday said it is mulling a complete overhaul of its corporate structure, including demerger and listing of the aluminum, iron & steel, and oil and gas businesses as standalone entities to unlock shareholder value. While the London-based parent will continue to be the holding company of the diversified mining group, Vedanta Ltd and the three businesses will operate parallelly as independent, listed companies, chairman Agarwal told PTI here. The company is evaluating all options, including demergers, spin-offs and strategic partnerships, and is looking at listing its aluminum, iron and steel, and oil and gas verticals as separate entities. “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 – a 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 (Aditya Birla group’s metal flagship) 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 when the ports, power and electricity transmission businesses were carved out of Adani Enterprises and listed separately. Subsequently, a renewable energy firm and a gas utility too were created where Adani got Total of France as a strategic partner. The structure being mulled by Vedanta is the complete opposite of what it was pursuing in the last couple of years. The Group first merged Cairn India – the oil and gas company it had acquired from the Cairn Energy PLC of UK – into Vedanta Ltd. It then attempted to delist Vedanta through share buyback but the offer failed to garner the requisite number. Agarwal said the structure being evaluated is to create businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships. “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.


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