Vedanta Announces Demerger of Diversified Businesses to Unlock Significant Value

INDIA: Vedanta Limited has announced its plan to demerge its business units into independent “pure play” companies to unlock value and attract big-ticket investment into the expansion and growth of each of the businesses. The move is aimed at creating world-class sector-leading companies that will drive the next phase of growth and capitalize on India and the world’s growing demand for commodities, energy, and technology.

The demerger is planned to be a simple vertical split, resulting in six separate listed companies, namely Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited. Each independent entity will have greater freedom to grow to its potential and true value via independent management, capital allocation, and niche strategies for growth.

Vedanta has a unique portfolio of assets among Indian and global companies with metals and minerals such as zinc, silver, lead, aluminum, chromium, copper, nickel, oil and gas, traditional ferrous vertical including iron ore and steel, and power, including coal and renewable energy. The company is now foraying into the manufacturing of semiconductors and display glass.

Once demerged, each independent entity will have greater freedom to grow to its potential and true value via independent management, capital allocation, and niche strategies for growth. It will also give global and Indian investors the potential to invest in their preferred vertical, broadening the investor base for Vedanta assets.

Vedanta Limited will remain an exciting incubator for new businesses, including Vedanta’s technology verticals buttressed by the strong financial earnings of the Tier-one Hindustan Zinc assets. The company will provide investors with the opportunity to invest in some of the world’s leading zinc production assets with a clear capital allocation policy while benefiting from these nascent technology companies until they too are ready to be released as independent, globally significant businesses.

The announcement comes at a time when India is forecast to be the fastest-growing major economy for the next several years. More than ninety percent of Vedanta Ltd’s profits are derived in India. Demand for commodities is expected to rise exponentially as the country continues to build a world-class infrastructure and strives to achieve aggressive targets for the energy transition, which is highly mineral-intensive. The Government of India’s emphasis on self-reliance will provide avenues for rapid growth for Indian companies in the commodities space.

Vedanta Limited is committed to best-in-class ESG practices and has a strong focus on metals critical for the transition to a green economy. The company has pledged Rs 5000 crore over the next five years on various social impact programs and its flagship project, Nand Ghar, is setting up model anganwadis across India. Vedanta Ltd. has been listed in the Dow Jones Sustainability World Index 2022, conferred the Golden Peacock Award for excellence in Corporate Governance 2022, and certified as a Great Place to Work 2023. Vedanta Limited is listed on the Bombay Stock Exchange and the National Stock Exchange.

The demergers will be conducted through a scheme process, and filing with stock exchanges for SEBI approval is expected in October 2023. The company will follow the customary process as per Indian law.