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Mining giant Vedanta announced on December 20 that it will not create a separate listed entity for its base metals business after talks with its stakeholders and lenders, according to a Reuters report.
“The lenders believe that the plan would be more favorable in unlocking the value and overall optimal balance of debt allocation between residual Vedanta and the resulting companies if Vedanta’s base metals business is retained in residual Vedanta itself,” it said in an exchange presentation.
Vedanta cited the ongoing exploration of alternative avenues to restart the copper business (in Thoothukudi, Tamil Nadu), which is an integral part of its base metals business, as the reason behind the move.
Non-implementation of the demerger of the base metals business and its retention in Vedanta will not impact the overall expected value creation, the company said.
Shareholders will continue to enjoy unlocking the value of the Vedanta Base Metals business as part of Vedanta’s residual legacy, where they will remain shareholders in addition to receiving equivalent shares in other resulting companies, reflecting Vedanta’s shareholding. The beneficial interests of shareholders in the overall value of Vedanta and the resulting companies will not be affected, it added.
While the demerger of the base metals business will be considered at a later stage, Vedanta stated in an exchange filing that the share rights ratio for the separation of the remaining five businesses will remain unchanged.
In September 2023, Vedanta Ltd, a metals-to-oil conglomerate, revealed plans to split its commodities operations into six listed companies, aiming to unlock value and attract substantial investments for the growth of each sector.
The six listed entities would have been Vedanta Aluminum, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited.
As part of the vertical split, shareholders will receive one share in each of the new listed companies for each share they own in Vedanta. After the demerger, Hindustan Zinc 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 receive one share in each of the newly listed entities for each share they hold in the existing Vedanta Ltd.,” Agarwal explained. “Each company will have its own CEO, who will also be a stakeholder, ensuring that the companies are run by the best experts.”
Second quarter results
Vedanta reported a net profit of Rs 5,603 crore in the September 2024 quarter against a loss of Rs 915 crore year-on-year (YoY). On a quarterly basis, profits rose 10% from Rs 5,095 crore. Revenue increased 10% to Rs 37,171 crore in Q1FY25 as against Rs 33,738 crore in Q2FY24.
The metals and mining company’s consolidated EBITDA rose 44% year-on-year to Rs 10,364 crore in the latest quarter from Rs 7,197 crore. The company attributed the EBITDA increase to favorable production raw material prices, structural cost savings initiatives and increased premiums across all businesses. The gross debt stood at Rs 78,654 crore as on September 30, 2024.
Its net debt stood at Rs 56,927 crore as on September 30, 2024 and decreased by Rs 4,400 crore over the June 2024 quarter.
