In a significant update, Vedanta Ltd., led by billionaire Anil Agarwal, announced on December 20, 2024, a major revision to its demerger plan. The company has decided to retain its base metals unit within the parent company, a move that stems from extensive discussions with stakeholders and lenders.
Shares of Vedanta closed at ₹477.50 on the Bombay Stock Exchange (BSE), marking a decline of 2.99% (₹14.70).
Key Highlights of the Announcement
- Retained Unit: The proposed demerger of Vedanta Base Metals Ltd (VBML) will not proceed at this stage.
- Stakeholder Feedback: Lenders and stakeholders favored retaining the base metals business in the parent company to optimize value and balance debt.
- Unchanged Ratios: The share entitlement ratios and other aspects of the demerger plan remain unaffected.
- Copper Business Revival: Vedanta is actively exploring avenues to restart its copper operations in Thoothukudi, Tamil Nadu, emphasizing the importance of the base metals segment.
Revised Demerger Plan Overview
| Segment | Status |
|---|---|
| Aluminium | Proceeding as planned |
| Merchant Power | Proceeding as planned |
| Oil and Gas | Proceeding as planned |
| Iron Ore | Proceeding as planned |
| Base Metals (VBML) | Retained within parent company |
Initially announced in July 2024, the demerger plan aimed to split Vedanta’s operations into six independent entities, enhancing value for shareholders. While the retention of VBML alters the roadmap, Vedanta remains confident in delivering shareholder value.
Shareholder Implications
Vedanta assures shareholders that this revision will not impact the overall value creation. Stakeholders will benefit from the continued integration of the base metals business within residual Vedanta while receiving equivalent shares in the newly listed companies.
The company reaffirmed that the decision aligns with its vision of unlocking maximum value and optimizing debt allocation across all entities.
Why Retain Base Metals?
The decision to retain VBML is influenced by several factors:
- Debt Optimization: Stakeholders believe this move better balances debt distribution.
- Copper Business Focus: Reviving the copper operations in Tamil Nadu plays a crucial role in the base metals unit’s strategy.
- Evolving Business Dynamics: Vedanta plans to revisit the demerger once the base metals business achieves greater maturity.
Performance Snapshot
Vedanta reported a robust performance in Q2 FY25:
| Metric | Value |
|---|---|
| Net Profit | ₹5,603 crore |
| Revenue | ₹37,171 crore |
| EBITDA | ₹10,364 crore |
| Gross Debt (Sept 2024) | ₹78,654 crore |
| Net Debt (Sept 2024) | ₹56,927 crore |
Looking Ahead
Vedanta remains committed to enhancing shareholder value and driving growth across its diversified businesses. The company’s proactive approach, including retaining VBML and reviving the copper operations, highlights its focus on long-term strategic benefits.
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