Vedanta Mulling Demerger of Aluminium, Other Metals

Vedanta Mulling Demerger of Aluminium, Other Metals

The head of India’s largest aluminium producer said last week that a demerger of the company may be in its near future.

Anil Agarwal said that Vedanta Ltd is considering spinning off individual businesses, including aluminium, steel, and iron, into their own separate businesses. Vedanta Resources would still act as a holding company for those new businesses, which will run and be traded independently of each other.

He elaborated on the plans in a video message to Vedanta shareholders.

“This means if you have one share of Vedanta Ltd, you will have many shares of other (demerged) companies.”

He went on to say that the spinoffs would simplify and streamline the corporation’s structure.

“Vedanta, in last two decades, has gone into the business which is more and more import substitute; very difficult for the entry into these areas. We have the business of oil and gas, the largest producer of aluminum, completely integrated power, copper, zinc, silver, lead, iron and steel, nickel, ferroalloys, semiconductor, display glass and more.”

At present, these divisions all run under the Vedanta umbrella.

Agarwal went on to say that the move was also prompted by potential investors’ sentiments.

“The whole world is looking to invest in India. I have been told that investors like pure play. I have asked all my advisors and my people to look (if we) can have these all products or some products to be independent, so the independent management and leadership can grow this business to the highest level.”

Agarwal said the demerger would aid Vedanta in focusing on the core business. It would also enable investors to focus their activity in the company.

“Some international companies want to invest in a particular area, they will get that opportunity. I would also like to have your view so we can take that step forward.”

The demergers would also give shareholders a better return on their investments, he opined.

Agarwal closed by noting that there was no settled timeframe for the move at present.