Mining giant Vedanta announced on December 20 that it will not create a separate listed entity for its base metals business after discussions with stakeholders and lenders, according to a Reuters report.
“The lenders believe that the scheme would be more conducive to unlocking the value and overall optimal balance of debt allocation across the Vedanta residual and spin-off companies if Vedanta’s underlying metal covenants are retained in the Vedanta residual itself,” it said in a filing to the stock exchange.
Vedanta cited its ongoing exploration of alternative routes to restart its copper works (in Thoothukudi, Tamil Nadu), which is an integral part of its base metals project, as the reason behind the move.
The company said that non-implementation of the process of demerger and retention of base metal undertakings in Vedanta will not impact the overall value creation as envisaged.
Shareholders will continue to enjoy the value unlock of the Vedanta Base Metals business as part of Vedanta’s remaining legacy as they will remain shareholders as well as receive equivalent shares in other resulting businesses, which will reflect Vedanta’s shareholding. He added that the beneficial interests of shareholders in the overall value of Vedanta and its resulting companies will not be affected.
While the demerger of the base metals business will be considered at a later stage, Vedanta said in an exchange filing that the share vesting ratio for the demerger of the remaining five companies will remain unchanged.
In September 2023, Vedanta Limited, a metals-to-oil conglomerate, revealed plans to split its commodity operations into six publicly listed companies, with the aim of unlocking value and attracting significant investments for the growth of each sector.
The six listed entities were Vedanta Aluminium, Vedanta Oil and 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 newly listed company for every share they own in Vedanta. Post the merger, Hindustan Zinc’s business, display units and semiconductor manufacturing 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.” Agarwal explained that shareholders will get one share in each of the newly listed entities for every share they own in Vedanta Ltd. Current “Each company will have its own CEO, who will also be a stakeholder, ensuring that companies are managed 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. On a quarterly basis, profits rose 10% from Rs 5,095 crore. Revenue rose 10% to Rs 37,171 crore in Q1FY25 against revenue of 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 fourth quarter against Rs 7,197 crore. The company attributed the rise in EBITDA to favorable commodity prices, structural cost saving initiatives and higher premiums across businesses. Total 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 as against June 2024 quarter.
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