Vedanta Group Plans to Drop its Restructuring Plans
The high profile decision by the Vedanta group around 3 months back to restructure its entire business has been put off for the time being. The founder of the Vedanta group, Anil Agarwal, confirmed that the group has decided not to undertake any major corporate restructuring at this point of time.
As per the original plan, the group had decided to hive off its various business verticals into separate units and list them on the stock exchanges.
The group has now confirmed that this decision to scrap the restructuring plan was taken after due internal deliberations as well as the inputs from experts and thought leaders in each field. The logical conclusion was that the current structure of the Vedanta group was optimal and did not really warrant any major changes at this point of time. This puts an end to the plans to demerge/spin off its different verticals into standalone business units.
In order to unlock value of its diversified commodities conglomerate, Vedanta had announced in November 2021 that it planned to separate its aluminium, steel and the oil & gas businesses into separate listed entities.
Check - Vedanta May Look to Demerge its Commodity Businesses
The group had also appointed a committee of directors to evaluate the options. At that time, the belief had been that the three businesses would be operated parallelly, enhancing the potential for growth and value creation.
Vedanta is a unit of London-based Vedanta Resources with operations spread across oil & gas, metals and power. Geographically, Vedanta has strong business interests across India, South Africa and Namibia.
Vedanta Resources, is controlled by Volcan Investments, which is the investment vehicle of the Anil Agarwal family. Vedanta has traditionally been an aggressive bidder for Indian PSU assets, the latest being the proposed sale of BPCL.
One open area now is what happens to the latest plan by the Anil Agarwal group to merge the Vedanta Resources parent into Vedanta India. While the former is fairly deep in debt, the India operations are extremely cash rich.
That is a proposal that has been doing the rounds for last few days. As of now it is not clear where this particular restructuring proposal still stands or whether that has also been scrapped for the time being.
One possible interpretation is that the Vedanta group may want to stay away from any such restructuring proposal till the time there is clarity on its BPCL bid.
In the past, Vedanta has had several brushes on corporate governance and it would not want that to become a bottleneck as it makes its big push for the assets of BPCL. For now, it does look like all proposals to restructure the group are totally off the table.
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