Vedanta Abandons Corporate Restructuring Plans
Vedanta drops its corporate restructuring plan announced in November.
Billionaire Anil Agarwal-controlled Vedanta Group has abandoned its corporate restructuring plans that aimed to carve out its businesses to unlock value.
The company, after a comprehensive review with inputs from various experts and advisers, concluded that the current structure is optimal, and is commensurate with the current scale and its diversified lines of businesses, according to its exchange filing. It will not undertake any corporate restructuring, including demerger or spin-offs, it said.
This marks an about-turn from the group’s November announcement that it’s looking at options, including separately listing its aluminium, iron and steel, and oil and gas units to streamline the group structure and unlock value. Bloomberg also reported that it was considering merging the indebted parent with the cash-rich, India-listed Vedanta Ltd.
The company reiterated its focus on capital allocation, including rewarding shareholders.
Vedanta, in its statement, stressed on three-pronged capital allocation:
Capital Expenditure: It will be around its existing line of operations to augment volume, cut costs, and focus on growth projects that will follow a minimum internal rate of return of 18%.
Dividend Policy: It remains unchanged at a minimum of 30% of attributable profit after tax, before exceptional items and excluding Hindustan Zinc Ltd., to be distributed as dividend. Pass-through of dividend from Hindustan Zinc within six months.
Inorganic Growth: Vedanta will only invest in businesses that will have synergies with its core business.
"Vedanta hasn’t proposed any changes to the structure. This should be a sigh of relief for its investors as there would be less complications,” Rakesh Arora, managing partner at Go India Advisors, said. “Also, (it's) now assured of higher dividend as the only way to take cash out of the company."
The company reiterated its interest in Bharat Petroleum Corp., which is at an expression of interest stage. And also its commitment to achieve Net Zero by 2050 or earlier.