Vedanta Ltd. has approved a significant corporate restructuring plan involving the demerger of its diversified businesses into six separate listed companies. This strategic move is aimed at unlocking value for shareholders and simplifying Vedanta’s corporate structure. Here’s what shareholders will get:

Vedanta Aluminium: This entity will have the largest capacity in India for aluminium production, including captive power and an alumina refinery. It will also include coal and bauxite mines and the 51 percent stake Vedanta owns in BALCO.

Vedanta Power: One of India’s largest private sector power generators.

Vedanta Base Metals: This company will hold a diverse portfolio of international base metal assets, including those in Tuticorin, Fujairah Gold, Silvassa, and VZL.

Vedanta Oil & Gas: This entity will include the Cairn business, making it India’s largest private sector crude oil producer.

Vedanta Steel & Ferrous: Expected to become one of India’s largest private sector exporters of iron ore, including assets like Sesa Iron Ore, Sesa Coke, WCL (Liberia), and a 95.95 percent stake in Electrosteel Steel.

Vedanta Ltd.: The currently listed entity will continue to house the manufacturing of LCD and Display glass, the semiconductor business, the stainless business, and the stake in Hindustan Zinc.

Shareholders of Vedanta Ltd. will receive one share in each of these newly listed entities for every one share they hold in the currently listed entity.

This restructuring is seen as a bold and ambitious move that could unlock significant value for Vedanta. It provides opportunities for global investors, including sovereign wealth funds, retail investors, and strategic investors to invest in these independent companies. The process is expected to be completed by FY25, subject to approvals.

While experts believe this move could unlock value for Vedanta, some note that it may not provide substantial benefits to retail shareholders. The stock of Hindustan Zinc, a subsidiary of Vedanta, remains part of Vedanta Ltd., limiting the value unlock for retail shareholders.

Vedanta’s parent company, Vedanta Resources Ltd., is facing significant debt obligations, with notes worth nearly $2 billion due in FY25. This restructuring could potentially help Vedanta meet its debt obligations and generate funds.

Shares of Vedanta witnessed a 7 percent increase following this announcement, representing its best single-day performance in 2023.

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