New Delhi / London: Vedanta Ltd unveiled a strategic demerger plan on Friday, marking a significant move to enhance value and attract substantial investment for the growth and expansion of its business segments.
The company’s Board has given the green light to adopt a “pure-play, asset-owner” business model, which will ultimately result in the establishment of six distinct publicly listed entities. These entities are set to be named Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited, as outlined in an official press statement.
The proposed demerger will be executed through a straightforward vertical split. For each existing share of Vedanta Ltd, shareholders will additionally receive one share in each of the five newly formed companies.
Furthermore, the company announced, “today’s announcement from Hindustan Zinc Limited (HZL), a subsidiary of Vedanta Limited, whereby their Board announced a comprehensive review of its corporate structure to unlock potential value and the intention to establish separate legal entities to oversee HZL’s Zinc & Lead, Silver, and Recycling business.”
Vedanta is dedicated to adhering to best-in-class Environmental, Social, and Governance (ESG) practices and has a strong focus on metals crucial for the transition to a green economy.
This strategic announcement comes at a time when India is projected to be the world’s fastest-growing major economy for several years ahead. Over ninety percent of Vedanta Ltd’s profits are generated within India.
The demand for commodities is expected to surge as India continues to develop world-class infrastructure and strives to meet ambitious goals for its energy transition, which relies heavily on minerals.
The government’s emphasis on self-reliance is poised to create significant growth opportunities for Indian companies in the commodities sector.
Vedanta boasts a unique portfolio of assets among Indian and global firms, encompassing metals and minerals such as zinc, silver, lead, aluminum, chromium, copper, nickel, oil and gas, traditional ferrous elements including iron ore and steel, and power generation, including coal and renewable energy. The company is also entering the manufacturing sector for semiconductors and display glass.
Following the demerger, each independent entity will enjoy greater autonomy to realize its full potential and value through independent management, capital allocation, and niche growth strategies.
This move is expected to offer global and Indian investors the opportunity to invest in their preferred segments, broadening the investor base for Vedanta’s assets.
