Vedanta Limited, under the leadership of billionaire Anil Agarwal, is making a significant move to enhance value creation by initiating a strategic demerger of its business units. This visionary step aims to establish six distinct listed companies, each focusing on specific sectors, with the overarching goal of unlocking the potential value within the conglomerate.
Vedanta's demerger plan outlines the formation of six listed entities, namely Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited. This strategic move is geared towards creating independent verticals for metals, power, aluminium, and oil and gas businesses.
The demerger is structured as a vertical split, ensuring that shareholders receive one additional share of each of the five newly listed companies for every share of Vedanta Limited they hold. This innovative approach is anticipated to unlock latent value within each business unit, fostering faster growth and enabling tailored management strategies.
Key leadership roles for the new entities have been strategically assigned, with John Slaven overseeing Vedanta Aluminium, Vibhav Agarwal leading Vedanta Power, Chris Griffith managing Vedanta Base Metals, and Arun Misra heading Vedanta Limited. This distribution of responsibilities aligns with the diverse nature of Vedanta's portfolio.
Beyond its established presence in metals and minerals, oil and gas, traditional ferrous vertical, and power, Vedanta is venturing into cutting-edge industries. The conglomerate is now entering the manufacturing of semiconductors and display glass, showcasing its commitment to technological innovation.
Vedanta underscores its commitment to sustainability, with each resulting company from the demerger pledging to achieve net-zero carbon emissions by 2050 and net water positivity by 2030. A substantial investment of $5 billion over the next decade is earmarked to expedite this transition towards sustainable practices.
As part of the broader restructuring, Vedanta's subsidiary, Hindustan Zinc, has revealed plans to unlock growth through corporate restructuring. This involves the creation of separate entities for zinc, lead, silver, and recycling businesses. The market responded positively to this announcement, with Hindustan Zinc experiencing a surge of almost 6 percent.
While Vedanta's shares exhibited a remarkable 7 percent increase, it faced challenges earlier due to a downgrade by Moody's Investors Service. The parent company, Vedanta Resources Ltd., and its subsidiaries have debt repayment obligations, including notes worth nearly $2 billion in 2025. The company is gearing up to address debt repayments totaling $3.6 billion in the next financial year.