Billionaire Anil Agarwal’s Vedanta Ltd announced a monumental shift on Friday, dissecting the metals-to-oil conglomerate into six distinct businesses. The decision is anticipated to boost the group’s financial stature.
Suffering from financial challenges, Vedanta Resources, the UK-based parent company, faced another setback when S&P Global Ratings downgraded its position to “CCC” from “B-“. The company’s stocks also experienced a 28% decline this year. The slip was notably contrasted by a 2% uplift in the Nifty Metal index. Setbacks included declining metal prices and Foxconn’s withdrawal from a US$19.5 billion chips joint venture.
The restructuring seems to hold a silver lining for Vedanta Resources. The revamp will make it more streamlined to sell stakes in these businesses, ultimately reducing its debt. Vedanta Resources holds a commanding 63.76% ownership in Vedanta Ltd.
Past endeavors by Agarwal to privatize Vedanta Ltd in 2020 did not bear fruit. This year, a proposed US$2.98 billion deal to curtail the debt of the parent company also met resistance from the Indian government.
The upcoming listings encompass Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited. Anil Agarwal remarked, “By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical.”
Stockholders of Vedanta Ltd, boasting a market-cap of US$10 billion, are set to gain. For each Vedanta Ltd share owned, they will acquire one share from each of the soon-to-be-listed five companies.
Projected to culminate by the financial year 2025, the restructuring awaits approvals. Arun Misra, Hindustan Zinc CEO, is slated to helm Vedanta Ltd. Concurrently, Hindustan Zinc unveiled intentions to segregate its zinc, lead, silver, and recycling ventures and to reevaluate its corporate structure.