November 18, 2021: More than a year after its unsuccessful bid to go private, Vedanta Ltd. seeks to revise its corporate structure.
According to the statement released by the company, the Anil Agarwal-led mining giant has hired experts to help it evaluate options and alternatives, such as demerger, spinoff, and strategic alliances, to increase the value and clarify its corporate structure.
The metal-mining conglomerate plans to split up its aluminium, iron-and-steel, and oil-and-gas businesses into separate publicly traded companies. The company’s board of directors and advisers will conclude their assessment and make recommendations as soon as possible.
Vedanta’s request to delist failed in October 2020 after it got a large number of unconfirmed offers and the tender procedure was hampered by technological problems. Vedanta Resources Ltd., together with two other promoter firms, made the delisting offer.
The company recently issued a statement saying – “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), a spin-off(s), strategic partnerships, etc.) for unlocking value and simplification of corporate structure,”
Amit Dixit, Assistant Vice President at Edelweiss Securities said “From an oversight perspective, this move would be better as every business will have to run its own show and be accountable to the shareholders.”
He also stated that delisting is not on the table and that it is doubtful that Vedanta will spin off its silver business or merge Zinc International with Hindustan Zinc Ltd at this time. There might be a framework like the Tata Group or the Aditya Birla Group, where several publicly traded companies work together.
According to Anil Agarwal, chairman of Vedanta, this step is intended to create independent, industry-leading global public companies that can benefit from greater focus, tailored capital allocation, and strategic flexibility so that customers, investors, and employees can benefit from long-term development and value.
Cairn India amalgamated with its parent firm Vedanta in 2017, cementing the business’s position as one of the world’s largest diversified natural resources companies. Vedanta absorbed its cash-rich business, which was in debt. Vedanta’s appeal to foreign investors was expected to improve as a result of the acquisition, which simplified the company’s structure and increased its size and free float.