Anil Agarwal-led Vedanta Ltd on Wednesday said it plans to demerge and list its aluminium, iron & steel and oil & gas businesses.
The three businesses had a combined turnover of around Rs 18,000 crore during the quarter ended September 30, 2021 against a consolidated turnover of Rs 30,048 crore.
In a regulatory filing after market hours on Wednesday, Vedanta said it has constituted a committee of directors to evaluate and recommend options and alternatives such as demergers, spin-offs or strategic partnerships.
A PTI report quoting chairman Agarwal said Vedanta and the three businesses would operate in parallel.
Agarwal added that the model being evaluated will provide natural avenues for growth and enhance shareholder value in all the three businesses.
A shareholder of Vedanta will own four times more shares once the plan is approved and implemented. These include the share of the company and those in the three businesses, Agarwal said.
Analysts warned that Vedanta had announced similar plans in the past only to abandon them later.
Vedanta said the exercise was meant to simplify and streamline the corporate structure, unlock value for
all stakeholders and create businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships.
The board has appointed various advisers to assist in evaluating the options.
“It is anticipated that the board and advisers will complete their evaluation and consider the way forward as soon as practically possible.
Appropriate announcements and public disclosures in accordance with Sebi listing rules will be made as and when required.”
According to Agarwal, over the past few years, the group has materially improved the operational performance of the businesses, increased cash flows, reduced debt while also focusing on accelerating investments in energy transition, health and safety, diversity and ESG in general.
Cairn pact
Cairn Oil & Gas on Wednesday said it had entered into a partnership with Baker Hughes. Under the alliance, Cairn is looking to increase its recoverable reserve to 250 mmboe (million barrels of oil equivalent) from 45 mmboe now. The company is the oil and gas arm of Vedanta.
According to a statement, the partnership will be across three phases covering technical assistance and conceptual design, detailed technical evaluation and pilot execution, and full field development planning and execution.