Vedanta Demerger on Track for December Completion

18 Apr 2024 , 10:59 AM

Chairman Anil Aggarwal of mining conglomerate Vedanta stated in a letter to stakeholders that the company anticipates the demerger of five of its major businesses—aluminum, oil and gas, steel, and aluminum—into distinct listed entities to be finished by December 2024.

Aggarwal also restated the company's goal of reaching an annual Group EBITDA of $7.5 billion within two years and deleveraging Vedanta Resources by $3 billion in the next three years.

"FY25 will be a transformative year for us on many fronts as we prioritize disciplined growth, operational excellence, and exploring opportunities along the value chain," Aggarwal wrote in his note.

The company expressed optimism about the demerger schedule a few days after CreditSights, a subsidiary of Fitch Group, voiced worries about the planned demerger. CreditSights stated in a Vedanta FAQ on its website, "For the Jan-2024 and Mar-2025 bondholders whose bonds are secured by shares of VEDL, it is unclear what happens to that collateral after the demerger."

"We maintain our view that conducting a restructuring ahead of the demerger would come with its own set of hurdles," the analytics company stated.

"The demerger will promote each company to leverage its own independent strengths and attract targeted investments, ultimately driving sustainable growth and long-term stakeholder value creation," Aggarwal stated.

The conglomerate owns stakes in both domestic and foreign businesses that deal in commodities such as zinc, silver, lead, aluminum, chromium, copper, and nickel; oil and gas; a conventional ferrous vertical that includes steel and iron ore; power, which includes coal and renewable energy; and semiconductor and display glass manufacturing.

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