Indian private-sector resources firm Vedanta plans to separate its six business units into independent companies to attract investment for expansion and growth of each unit.
The company is demerging into Vedanta Aluminium, Vedanta Oil and Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited. The latter will comprise holdings in Hindustan Zinc, Ferro Alloys Corporation, Nicomet and the display and semiconductor business.
Vedanta's rationale for demerging is to simplify its corporate structure by having sector-focused independent businesses that will attract investment into dedicated pure-play companies and better align with customers, investment cycles and end markets.
"The demand for minerals, metals, oil and gas, and power is going to grow very rapidly and Vedanta's businesses are uniquely positioned to service this rising demand and reduce reliance on imports," Vedanta chairman Anil Agarwal said.
"By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical. While they all come under the larger umbrella of natural resources, each has its own market, demand and supply trends, and potential to deploy technology to raise productivity," Agarwal said.
With the demerger, for every 1 share of Vedanta Limited, shareholders will additionally receive 1 share of each of the five newly listed companies.
Vedanta expects the timeline for tentative approval for the demerger to be anywhere around 12-13 months, and subject to the necessary agreement from shareholders, creditors, stock exchanges and in some cases Indian state governments. It expects the listing and trading of the resulting companies' shares with the stock exchanges by September 2024.
The new companies will remain committed to achieving net zero carbon emissions by 2050 and net water positivity by 2030, with the aim to spend $5bn over the next 10 years to accelerate this transition, Vedanta said.
The company said a strategic review of its steel and steel raw materials business, including the potential sale of some assets, announced in June remains in place.
