Mining giant Vedanta announced on December 20 that it will not create a separate listed entity for its base metals business after discussions with its stakeholders and lenders, according to a Reuters report.
“Lenders believe that the scheme will be more conducive to the value and overall optimal balance of credit allocation across the remaining Vedanta and the resulting companies if the majority base metal underwriting is retained by the remaining Vedanta,” it said in an exchange filing.
Vedanta cited the reason behind the move as exploring alternative routes to restart its copper business (in Thoothukudi, Tamil Nadu), which is an integral part of its base metals business.
Non-implementation of base metal separation and retention of them in Vedanta will not affect overall value creation as expected, the company said.
Shareholders will continue to enjoy unlocking the value of the Vedanta Base Metals business, as part of legacy Vedanta, they will continue to be shareholders in addition to receiving equal shares in other resulting companies that reflect Vedanta shareholding. The overall value of Vedanta and the beneficial interests of the shareholders of the resulting companies will not be affected.
Vedanta said in an exchange filing that while the demerger of the core metals business will be considered later, the equity ratio for the spin-off of the remaining five businesses will remain unchanged.
In September 2023, metals-oil conglomerate Vedanta Ltd revealed plans to divest its commodities operations into six publicly listed companies, with the aim of unlocking value and attracting significant investment to grow each segment.
The six listed entities are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel & Ferrous Materials, Vedanta Base Metals and Vedanta Limited.
As part of the vertical demerger, shareholders will get one share in each newly listed company for every share they hold in Vedanta. Post demerger, Hindustan Zinc's business and display and semiconductor manufacturing units will remain with Vedanta Limited.
In an exclusive interview with Business Today TV, Anil Agarwal said, “My vision is that each of these companies becomes as big as Vedanta. Shareholders of each newly listed entity will get one share for each share they hold in the current Vedanta Ltd,” Agarwal explained. “Each company has its own CEO, who will also be a shareholder, ensuring that the companies are run by the best experts.”
Q2 results
Vedanta reported a net profit of Rs 5,603 crore in the September 2024 quarter against a loss of Rs 915 crore on a year-on-year (YoY) basis. Quarter-on-quarter, profit increased by 10% at Rs 5,095 crore. Revenue rose 10% to Rs 37,171 crore in Q1FY25 compared to Rs 33,738 crore in Q2FY24.
The metals and mining company's consolidated EBITDA rose 44% to Rs 10,364 crore compared to Rs 7,197 crore in the previous quarter. The company attributed the rise in EBITDA to favorable commodity prices, structural cost saving initiatives and higher premium across businesses. As on September 30, 2024, the gross debt stood at Rs 78,654 crore.
Its net debt stood at Rs 56,927 crore as on September 30, 2024, down by Rs 4,400 crore compared to the June 2024 quarter.