Anil Agarwal says mulling separate listing of different businesses

New Delhi: Mining magnate Anil Agarwal has said his group's flagship firm Vedanta Ltd is considering demerger and separately listing all or some businesses like aluminum, iron and steel, and oil and gas to unlock shareholder value.

While the London-based parent Vedanta Resources will continue to be the holding company of diversified mining group Vedanta Ltd, some or all businesses will operate parallelly as independent, listed companies. In a video message to shareholders, Vedanta Chairman Anil Agarwal said the company has a diversified presence in oil and gas, metals and mining, and a separate listing of different businesses will help them grow many folds. "This means if you have one share of Vedanta Ltd, you will have many shares of other (demerged) companies," he said. Agarwal had in November 2021 first spoken about a rejig of the corporate structure through demergers, spin-offs, and strategic partnerships.

The move was aimed at simplifying and streamlining the corporate structure, unlocking value for all stakeholders, and creating businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships. But that plan never took off. He is now seeking shareholder and stakeholder feedback for a possible separate listing of businesses. "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," he said. All these businesses right now are in Vedanta Ltd.

"The whole world is looking to invest in India. I have been told that investors like pure play," he said. "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". The demerger will help them remain focused on the core business. Also, this will offer investors an opportunity to invest in sectors and companies of their liking. He however set no timeframes for the decision. "Some international companies want to invest in a particular area, they will get that opportunity," he said. "I would also like to have your view so we can take that step forward." The move, he said, would offer shareholders a better return and dividend. "I promise you that we will always remain focused to create shareholder value... when I find that it is appropriate we will go to the board and will take it forward," he said.

The plan is the same as what port-to-energy conglomerate Adani Group did in 2015 when the ports, power and electricity transmission businesses were carved out of Adani Enterprises and listed separately. Subsequently, a renewable energy firm and a gas utility too was created where Adani got TotalEnergies of France as a strategic partner. Adani management has spoken of plans to a similar thing with the airports and data centre business which are currently housed in Adani Enterprises - the group's flagship firm and a business incubator. The structure being mulled by Vedanta is the complete opposite of what it was pursuing in recent years. The group first merged Cairn India - the oil and gas company it had acquired from Cairn Energy PLC of the UK - into Vedanta Ltd.

It then attempted to delist Vedanta through share buyback but the offer failed to garner the requisite numbers. Agarwal believes that the structure being evaluated is to create businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships. The restructuring would also tailor the capital structure and capital allocation policies based on business-specific dynamics, creating distinct investment profiles to attract deeper and broader investor bases. In recent times, Vedanta is said to have faced challenges in financing projects. Parent Vedanta Resources raised around USD 450 million from two of its rivals earlier this year, triggering concerns that the company is unable to raise money from regular debt channels and banks