Vedanta demerger plan revised; mining major to retain base metal unit under parent

Mumbai-listed mining conglomerate Vedanta Ltd on Friday said it has revised its demerger proposal and decided to retain the base metals undertaking within the parent firm. In a regulatory filing, Vedanta said that the decision was taken following the deliberations with stakeholders, including lenders with respect to the scheme and approval by the board of directors in a meeting held on Friday. The company had earlier said that existing businesses will be structured in the six independent companies after the demerger: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Ltd.

"Lenders believe the Scheme would be more favourable for unlocking value and overall optimal balancing of debt allocation across residual Vedanta and resulting companies if the Vedanta Base Metals undertaking is retained in residual Vedanta itself," the company said in the latest filing.

Vedanta also stressed the ongoing search for alternative avenues for restarting the copper business in Thoothukudi, Tamil Nadu, which is an integral part of the Base Metals undertaking, to be the reason behind the development.

The non-implementation of demerger of the Base Metals undertaking and retaining the same in Vedanta will not impact the overall value creation for shareholders.

"A demerger of the Vedanta Base Metals undertaking may be considered at a stage when the Base Metals business evolves and matures to realise the full value potential of such demerger for shareholders," the filing said.

The shareholders will continue to benefit from value unlocking in the Base Metals business as part of residual Vedanta, while also receiving equivalent shares in the resulting companies.

The shareholders' beneficial interests in the overall value of Vedanta and resulting companies will remain unaffected, it said.

The revision will not impact the parts of the demerger scheme. All terms which also includes the share entitlement ratio, remain unchanged.

Vedanta Chairman Anil Agarwal had earlier said the proposed demerger of the company's diverse verticals that represent more than 15 commodities will see it progress from being asset managers to asset owners.

As the company passes through the transition phase, Vedanta is focusing on consolidating and strengthening its asset base to emerge as a world leader in each of its verticals, the chairman had said.

The diversified natural resources company had moved the NCLT seeking a demerger after receiving a nod from lenders and had expressed hopes of completing the process by the end of this fiscal year.

Vedanta had received approval from 75 per cent of secured creditors for the proposed demerger of its businesses.

The demerger will help simplify the company's corporate structure by creating independent businesses. Moreover, it will offer global investors direct investment opportunities in pure-play companies linked to the country's impressive growth.

The demerger will allow the individual units to pursue strategic agendas more freely and better align with customers, investment cycles, and end markets.

From FY24 onwards, the company is investing USD 1.9 billion as growth capex across its businesses.

The company reported a consolidated net profit of Rs 4,352 crore in the September quarter. It had posted a consolidated net loss of Rs 1,783 crore in the year-ago period.