The latest on the Vedanta demerger timeline. As per a report by Financial Times, the company is set to split into five listed companies early next month. The Indian conglomerate is reportedly moving ahead with the long-running restructuring plan aimed at simplifying its business and reducing debt.
The demerger plan had received approval in December. The company has also announced an interim dividend amid the 1:5 split buzz.
Financialexpress.com, however, could not verify the demerger timeline independently.
Vedanta: Unlocking value via demerger
Vedanta Chairman Anil Agarwal stated to the Financial Times that the break-up would give the new businesses a “free hand to grow” and could create significant shareholder value. He also mentioned that the market value of the five companies could be far higher than Vedanta’s current market capitalisation of about $27 billion.
What will Vedanta look like after the split?
The company will continue as Vedanta Ltd, which will house the base metal business. The four other entities will be Vedanta Aluminium, Malco Energy. Talwandi Sabo Power and Vedanta Steel and Iron, as per Reuters.
The Financial Times also reported that the broader structure will create standalone listed businesses across aluminium, steel, power, zinc, oil and gas. Agarwal also stated that a privately held parent company controlled by him would retain roughly the shareholding in each of the new firms.
Why is Vedanta restructuring business?
The restructuring has been in the works for years. One of the main reasons is debt reduction. The Financial Times said that Vedanta has long struggled with heavy debt burden, pegged at about $11 billion by S&P Capital IQ. Agarwal said that the five new companies together would carry around $7 billion in debt.
According to Reuters, the plan was proposed in 2023 but faced resistance from the Indian government, which was concerned that a break-up could affect the recovery of dues. That hurdle eased after tribunal approval in December. Vedanta CFO Ajay Goel had stated to Reuters in January that the four demerged units were expected to list on Indian exchanges by mid-May.
Agarwal sees energy security as a major issue for India, especially amid volatility related to the Iran war. Vedanta’s Cairn Oil and Gas aims to double its production within six years to 1 million barrels of oil equivalent a day.
Recently, Vedanta had also announced a third interim dividend of Rs 11 per share, with March 28 fixed as the record date.