Vedanta Group Seeks Shareholders’ Approval for Demerger
In a recent development, Vedanta Group, under the leadership of Chairman Anil Agarwal, is gearing up to seek shareholders’ approval for a strategic move to divide the company’s businesses into five distinct entities. This decision follows Vedanta’s remarkable achievement of delivering the highest dividend yield among its peers, standing at an impressive 81 percent.
Last September, Vedanta had initially planned to demerge its business into six entities for separate listing on the exchanges. However, a recent shift in strategy led the company to exclude the base metal business from the demerger plans until it attains the desired scale. Anil Agarwal, in a letter addressed to shareholders, highlighted the company’s exceptional performance in wealth creation, with investment in Vedanta shares witnessing a remarkable fivefold growth in the past five years.
A Record-Breaking Quarter for Vedanta
The decision to seek shareholders’ approval for the demerger comes on the heels of Vedanta’s record-breaking financial performance in the third quarter. The company reported an impressive EBITDA of ₹11,284 crore, marking the highest figure in the last eleven quarters. Notably, Vedanta’s net profit surged to ₹4,876 crore, reflecting a substantial 70 percent increase from the same period the previous year. Moreover, the company’s net debt to EBITDA ratio stood at an impressive 1.4 times, representing the lowest ratio in the past seven quarters.
During the third quarter, Vedanta witnessed significant growth in its production figures, with aluminium production reaching 6.14 lakh tonnes and 18.2 lakh tonnes over nine months, showcasing a 3 percent year-on-year increase. Additionally, alumina production saw a substantial 16 percent jump to 15.43 lakh tonnes over nine months, while Zinc India achieved its highest-ever refined metal output during the period.
Anil Agarwal’s Vision for the Demerger
Speaking on the impending demerger, Anil Agarwal expressed his confidence in Vedanta’s upcoming move to seek final approval from creditors and shareholders for the proposed demerger scheme. He outlined the key benefits of the demerger, stating that post the restructuring, every Vedanta shareholder would receive an additional share in each of the four newly demerged companies – Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, and Vedanta Steel and Ferrous Metals.
Agarwal further elaborated on the strategic implications of this decision, emphasizing that the demerger would significantly broaden Vedanta’s investor base. The move would also offer new investors the opportunity to select from the distinct entities representing pure-play industry verticals, thereby enhancing investor choice and capitalizing on the unique strengths of each business segment.
As Vedanta marches forward with its demerger plans, the company remains steadfast in its commitment to delivering strong growth, fostering shareholder value, and expanding its market presence. Stay tuned for more updates on Vedanta’s transformative journey towards unlocking new avenues for growth and prosperity in the global market landscape.
