 "Vedanta promoters to retain over 50% stake in all demerged entities")
Vedanta Ltd promoters plan to retain a controlling stake of over 50 per cent in each of its demerged entities as part of the company’s strategy to establish independent, sector-focused firms, Vedanta Resources Chairman Anil Agarwal told The Economic Times in an interview.
The conglomerate is separating its core businesses—aluminium, oil and gas, power, and steel—into standalone entities. These divisions currently operate under Vedanta Ltd, the Indian subsidiary of UK-based Vedanta Resources.
The decision for a demerger stems from the belief that individual business units can achieve better growth independently than under a single corporate structure. Vedanta confirmed promoter shareholding levels will remain stable, without any plan to divest stakes to reduce debt. Additionally, there are no immediate plans to increase ownership in any newly formed entity.
As of now, Vedanta Resources holds a 56 per cent stake in Vedanta Ltd, down from nearly 70 per cent previously, as part of its debt management strategy. Vedanta Resources currently carries over $5 billion in debt, aiming to reduce this to $3 billion by financial year 2026-27.
Vedanta demerger to give more autonomy to businesses
The demerger aims to streamline operations, granting greater autonomy and growth opportunities to individual business units. Vedanta shareholders and creditors have already approved the demerger proposal. A formal application was submitted to the National Company Law Tribunal (NCLT) in March, with a hearing anticipated within six to eight weeks. Following regulatory approval, the new entities will be listed on stock exchanges.
Vedanta projects significant long-term growth, estimating collective revenues of about $40 billion over five years, with an operating profit margin of 30-35 per cent. ALSO READ: NCLT rejects Talwandi Power's demerger in Vedanta restructuring plan
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Earnings before interest, taxes, depreciation, and amortisation (Ebitda) are projected to reach $12-13 billion. The company has already reported an Ebitda of ₹31,924 crore (approximately $3 billion). Vedanta envisions each segment being managed independently, fostering faster decision-making and clearer accountability.
The company clarified it might divest its steel business if a suitable offer aligns with its valuation expectations. The steel segment is described as profitable, with robust assets and market presence.