Anil Agarwal-led Vedanta today unveiled plans for a complete overhaul of the corporate structure and the company is planning to list its aluminium, iron and steel, and oil and gas businesses as seperate entities.
“The Board has decided that, considering the scale, nature, and potential opportunities for various business verticals of the company, it should undertake a comprehensive review of the corporate structure and evaluate a full range of options and alternatives including demergers and spin-offs for unlocking value and simplification of corporate structure,” the company said in a filing.
The Board has also constituted a committee of directors to evaluate and recommend such options and alternatives, Vedanta said.
On Wednesday, Vedanta shares were up 1.64% to close at ₹338.20 on NSE.
The strategic objectives outlined by the Board for undertaking such an exercise are simplification and streamlining of corporate structure, unlocking value for all stakeholders, and creation of businesses which are positioned better to capitalize on their distinct market positions and deliver long-term growth and enable strategic partnerships.
Vedanta has also appointed various advisors to assist the Board in evaluating the options.
“Over the past few years, the 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,” Vedanta Chairman Anil Agarwal said.
“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,” Agarwal further said.
The company hopes that the rejig will result in a tailored capital structure and capital allocation policies based on business specific dynamics.
Vedanta is also looking at distinct investment profiles to attract deeper and broader investor bases; and accelerate emissions reduction and strong ESG practices.
“We will continue to leverage our significant strengths in technology, operations and people to better serve our customers and all stakeholders,” Vedanta Chairman said in a statement.
Under the restructuring being evaluated, Vedanta Ltd and three businesses will operate parallelly, Agarwal later told news agency 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.
“The idea is to do it as early as possible. I can’t give a timeframe but it will be very soon,” he said.
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