Vedanta Ltd, the metals, mining and oil and gas conglomerate owned by Anil Agarwal, is weighing a plan to split the Indian listed firm, joining a growing number of global giants such as GE, J&J and Toshiba that recently announced similar moves.

The Vedanta board has asked the company’s management to undertake a comprehensive review of the corporate structure and evaluate a range of options and alternatives including demerger(s), spin-off(s) and strategic partnerships for unlocking value and simplification of the corporate structure, the company said in a statement.

Pending a detailed evaluation, the group intends to carve out its aluminium, iron and steel, and oil and gas businesses into standalone listed entities, the statement added, noting that the board considered the potential opportunities for various verticals ahead of its decision.

“This step, whilst pending a detailed evaluation, is designed to create independent, industry-leading, global public companies, where each can benefit from greater focus, tailored capital allocation and strategic flexibility to drive long-term growth and value for customers, investors and employees,” Chairman Anil Agarwal said in the statement.

Must explain why: Experts

Experts said the company should explain the reason for the move given that it had undertaken a consolidation exercise few years back.

“A few years ago, Vedanta brought various companies together under a holding company. Now, they are unravelling that and unbundling the companies,” said Amit Tandon, Managing Director, Institutional Investor Advisory Services, a proxy advisory firm.

Vedanta also seeks to enable strategic partnerships, tailored capital structure and capital allocation policies based on business specific dynamics, distinct investment profiles to attract deeper and broader investor bases and accelerate emissions reduction and strong environment, social and governance (ESG) practices.

“We will continue to leverage our significant strengths in technology, operations and people to better serve our customers and all stakeholders,” Agarwal said in the statement.

“Over the past few years, the Group has materially improved the operational performance of the businesses, increased cash flows, reduced debt whilst concomitantly focussing on accelerating investments in energy transition, health and safety, diversity and ESG in general,” he added.

Panel formed

To pursue the plan, the board has formed a committee of directors to evaluate and recommend options and alternatives. The board has also appointed various advisors to assist it in evaluating the options.

 

Related Topics
comment COMMENT NOW