Billionaire Anil Agarwal‘s Vedanta Ltd said on Friday it would split the company into six separate listed businesses as the metals-to-oil conglomerate seeks to boost growth amid a slump in its financial performance.
The company’s UK-based parent, Vedanta Resources, has seen major agencies cut its ratings on concerns over debt repayments, with S&P Global Ratings downgrading it to “CCC” from “B-” on Friday and placing it on credit watch.
Vedanta Ltd shares have lost 28% so far this year, compared to a near 2% rise in the Nifty Metal index, dragged lower by a string of poor results due to weakness in metal prices and as Foxconn backed out of a $19.5 billion chips joint venture with the company.
Its revenue fell nearly 13% in the first quarter, while profit slumped 40% in its fourth straight quarterly decline.
The six units being planned to be listed are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited.
“By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical,” chairman Anil Agarwal said in a statement.
For every share of Vedanta Ltd, which has a market-cap of $10 billion, its stockholders will receive one additional share of each of the five companies that will be listed.
The entire restructuring process is expected to be completed by financial year 2025, subject to approvals. Filing with stock exchanges for approval from the country’s markets regulator is expected during October 2023, Vedanta said.
Early in the day, Vedanta’s unit Hindustan Zinc said it plans to create separate entities for its zinc, lead, silver and recycling businesses to unlock “potential value” and will appoint external advisors to review its corporate structure.
Agarwal has sought to trim down the group’s debt this year by getting Hindustan Zinc to buy some of the parent group’s zinc assets in a $2.98 billion deal.
However, the Indian government, which owns nearly 30% stake in Hindustan Zinc, has opposed the move.
Hindustan Zinc CEO Arun Misra will lead Vedanta Ltd, while mining veteran and Vedanta Resources Base Metals CEO Chris Griffith will helm the new base metals company.
Vedanta Aluminium will be run by John Slaven, while Vibhav Agarwal will lead Vedanta Power, Vedanta Steel and Ferrous Materials will be run by Navin Jaju and Vedanta Oil & Gas will be run by Steve Moore.