Vedanta demerger details to become clear by March-end, says Agarwal

‘Market is good, production is going well; having separate firms will create value’

Metals and mining group Vedanta Limited will announce the contours of a proposal to spin off key businesses into separate listed companies by March-end, chairman Anil Agarwal said.

While the zinc business is already housed in a listed subsidiary, the plan is to demerge the aluminum, iron and steel, and oil and gas businesses into standalone, listed entities.

This will ‘unlock value for all stakeholders’ as well as create businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships, he told PTI in an interview. It will also help tailor the capital structure and capital allocation policies based on business-specific dynamics, as also create distinct investment profiles to attract deeper and broader investor bases.

‘Natural progression’

“It (demerger) is a natural thing to do. Market is very good and production (at different divisions of Vedanta) is going well. And so we think having separate companies will create valuation,” he said. “Maybe in a month and a half, sometime before March-end we will announce the full (contours).”

Vedanta Limited had in November announced that its board of directors had formed a sub-committee to evaluate a potential spin-off of its aluminum, iron and steel, and oil and gas businesses into separate listed units. Following the sub-committee’s evaluation, the board could also consider other alternatives such as strategic partnerships.

The spin-off will result in three new listed entities with shareholding mirroring that of Vedanta Limited After this, London-based parent Vedanta Resources group will comprise five listed entities — Vedanta Limited, the three newly listed firms and the listed zinc subsidiary, Hindustan Zinc, in which Vedanta Limited holds 64.9%.

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