Vedanta Considers Split to Simplify Company Structure

Goals

According to the statement, the strategic objectives behind the exercise are:

  • Simplification and rationalization of the company structure.

  • Unleash value for all stakeholders.

  • Creation of companies better positioned to take advantage of their distinct market positions, ensure long-term growth and enable strategic partnerships.

  • Capital structure and capital allocation policies tailored to specific business dynamics.

  • Distinct investment profiles to attract deeper and broader investor bases.

  • Accelerating emissions reduction and strong ESG (environmental, social and corporate governance) practices.

This stage is designed to create independent, industry-leading, global public companies where each can benefit from greater focus, tailored capital allocation and strategic flexibility to drive growth and long-term value for customers, investors and employees, according to Anil Agarwal, president of Vedanta Resources.

In 2017, major oil producer Cairn India merged with its parent company Vedanta, cementing the company’s position as one of the largest diversified natural resource companies in the world. The debt-ridden Vedanta absorbed its cash-rich subsidiary. The merger was expected to increase Vedanta’s appeal to global investors as it simplifies the structure and increases the size and free float of the company.

In 2012, Vedanta Resources announced that it would merge all of its Indian businesses, including Sterlite Industries and Sesa Goa, into a single entity, named Sesa Sterlite, and Vedanta was to own 58.3% of the new company’s capital. The unlisted Vedanta Aluminium, Madras Aluminum and Vedanta’s 38.8% stake in oil and gas producer Cairn India were then to be transferred to Sesa Sterlite.