- Vedanta Limited is demerging its business units into independent "pure play" companies to unlock value and attract big investments.
- This move capitalizes on India's growing demand for commodities, energy, and technology.
- India's rapid economic growth and emphasis on self-reliance create opportunities for Vedanta's businesses.
- The demerger will result in six separate listed companies: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited.
- Shareholders of Vedanta Limited will receive shares in each of the new companies.
- Vedanta values, including a commitment to ESG practices, will be embedded in the new entities.
- Each independent entity will have the freedom to pursue its growth potential and niche strategies.
- Vedanta Limited will remain an incubator for new businesses and technology ventures.
- Vedanta plans to reduce 25% absolute GHG emissions by FY2030 and achieve net-zero carbon emissions by 2050.
- The company has a track record of delivering consistent shareholder returns while investing for growth.
- A strategic shift aims to enhance stakeholder value by optimizing capital allocation and maintaining a strong balance sheet.
- The focus areas include building a global commodities powerhouse, maintaining operational excellence, and delivering on growth opportunities.
- Vedanta Limited is restructuring its business into six separate verticals to create direct investment opportunities and align strategies better.
- The demerger process is expected to be completed in FY25, subject to approvals.
- Shareholders will receive shares in five new listed entities, including Vedanta Aluminium, Vedanta Power, Vedanta Base Metals, Vedanta Oil & Gas, and Vedanta Steel & Ferrous.
- The restructuring aims to streamline the business into a "Asset Owner" driven model.
- Each vertical will have independent leadership and boards, enabling autonomy for business management.
- The timetable for implementation includes various steps like NCLT approval, conducting member and creditor meetings, and listing of resulting companies' shares.
- Share entitlement ratios vary for different entities, with each shareholder being an equal partner in the value creation journey.
- The restructuring aims to address capital allocation risk, improve access to growth capital, attract the right investors, and empower independent management teams.
- Vedanta Limited will continue to house Hindustan Zinc and act as an incubator for new and small businesses.
- Vedanta Limited will retain its stake in Hindustan Zinc and focus on various businesses, including stainless steel, nickel production, semiconductors, and more.
- Vedanta Limited's investment thesis includes exposure to high-potential businesses, zinc fundamentals, India's semiconductor market, and a strong track record of operational excellence.
- Vedanta Aluminum is on track to become a top global aluminum producer outside China, with a focus on green aluminum production.
- The business is targeting value-added product portfolio growth, first quartile cost curve position, and expansion to 3 MTPA aluminum production.
Vedanta Limited Overview:
- Houses Hindustan Zinc, the world's largest underground zinc-lead mine.
- Has power assets including captive power, wind, solar, and WHRB power.
- Operates in the stainless-oriented business.
- Includes subsidiaries like FACOR and Nicomet for chrome and nickel production.
Vedanta Limited Investment Thesis:
- Aims to accelerate growth in high-potential future-facing businesses.
- Unique portfolio with exposure to zinc, semiconductors, stainless steel, and more.
- Positioned to tap into the growing Indian electronics and green energy markets.
- Strong management and operational excellence track record.
Hindustan Zinc Overview:
- A major integrated zinc producer globally.
- Refined metal production in FY23: 1032kt.
- Significant silver production.
- Operates mines and smelters in India.
Semiconductor and Display Overview:
- India's semiconductor demand expected to outgrow global demand.
- Significant growth expected in the flat panel display market.
- Vedanta poised to benefit from these trends.
Stainless Steel Overview:
- Capacity expansion and exploration plans.
- Focus on charge chrome and nickel production.
- Creating a stainless steel vertical through subsidiaries.
Vedanta Aluminium Overview:
- On the path to become a top 3 global aluminum producer.
- Largest installed aluminum capacity in India.
- Integrated with power and alumina refinery.
- Significant market share in India.
Vedanta Aluminium Investment Thesis:
- Aims to boost India's self-reliance in aluminum production.
- Poised to capitalize on strong aluminum demand growth.
- Ranked high in sustainability indices.
- Focus on value-added product portfolio.
Vedanta Oil & Gas Overview:
- Largest private sector oil and gas producer in India.
- Extensive acreage and reserves.
- Significant exploration and development projects.
Vedanta Oil & Gas Investment Thesis:
- Aims to supply a significant portion of India's crude.
- Strong growth potential in the oil and gas sector.
- Significant contribution to domestic crude production.
Vedanta Base Metals Overview:
- Diverse base and precious metal portfolio.
- Largest copper production capacity.
- Zinc International with substantial reserves.
Vedanta Base Metals Investment Thesis:
- Positioned to supply critical metals for the energy transition.
- Investment in copper refining and expansion.
- Significant growth potential in precious metal streams.
Vedanta Steel and Ferrous Overview:
- Operations in iron ore, steel, and met coke.
- Significant expansion and acquisition plans.
- Presence in India and Liberia.
Vedanta Steel and Ferrous Investment Thesis:
- Scalable iron ore business with growth plans.
- Positioned to capitalize on Indian steel demand.
- Strong management and integrated steel platform.
Vedanta Power Overview:
- One of the largest independent power platforms.
- Capacity of up to 4.8 GW.
- Assets in Punjab and other regions.
Vedanta Power Investment Thesis:
- A major player in India's private power sector.
- Poised to benefit from the growth in Indian power demand.
- Experienced management and strategic position.