Vedanta demerger: Mining giant scraps base metals demerger plans amid copper business revival effort

Mining giant Vedanta said on December 20 that it would not set up a separate listed entity for its base metals business after discussions with its stakeholders and lenders, according to a Reuters report.

“The lenders believe that the scheme will be more conducive to unlocking value and overall optimal balancing of debt allocation between the surviving Vedanta and the resulting companies if the Vedanta base metals business is retained within the surviving Vedanta itself,” the exchange filing said.

Vedanta cited the ongoing exploration of alternative avenues to relaunch the copper business (Thoothukudi, Tamil Nadu), which is an integral part of its base metals business, as the reason for the move.

The failure to divest base metals at Vedanta and retain them will not impact overall value creation as intended, the company said.

Shareholders will continue to enjoy the value unlock of the Vedanta Base Metals business as part of the legacy residual Vedanta, where they will remain shareholders in addition to receiving equivalent shares in the other companies received, reflecting the shareholders’ beneficial interests in Vedanta and its spin-off companies to the total cost will remain unchanged, he added.

While the demerger of the base metals business will be discussed at a later date, Vedanta said in a stock exchange that the equity ratio for the spin-off of the remaining five businesses will remain unchanged.

In September 2023, Vedanta Ltd, the metals-to-oil conglomerate, revealed plans to split its commodities operations into six publicly listed companies with the aim of unlocking value and attracting significant investment to grow each segment.

The six listed entities will be Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited.

As part of the vertical demerger, shareholders will get one share for each of the newly listed companies they hold in Vedanta. After the demerger, Hindustan Zinc’s businesses and display and semiconductor manufacturing units will remain with Vedanta Limited, it said.

In an exclusive interview with Business Today TV, Anil Agarwal said: “My vision is for each of these companies to be as big as Vedanta itself. Shareholders will get one share in each of the newly listed entities that they hold in the current Vedanta Ltd.,” explained Agarwal its CEO, who will also be a stakeholder in ensuring that companies are led by the best experts.”

Q2 results

Vedanta reported a net profit of Rs 5,603 crore in the September 2024 quarter against a loss of Rs 915 crore quarter-on-quarter.Revenue rose 10% to Rs 37,171 crore crore in Q25 as against 33,738 in Q4’24 in front of

The metals and mining company’s consolidated EBITDA rose 44% year-on-year to Rs 7,197 crore.The company attributed the increase in EBITDA to favorable product prices, structural cost-saving initiatives and increase in premiums for businesses 78,654 crores as on September 30, 2024.

Its net debt stood at Rs 56,927 crore as of September 30, 2024, down by Rs 4,400 crore from the June 2024 quarter.