Vedanta shares jump 7% on reports of commodities biz spin-off

Shares of Vedanta jumped nearly 7% in intraday trade on Friday on reports that the company is looking to separate its commodities businesses into four entities to get better valuations.

The stock was last trading at Rs 222.10 on the NSE, up 6.6% over previous close. The market value of the company was at Rs 82,558 crore.

Reuters on Thursday reported, citing sources, that the company will spin off its metals, power, aluminium and oil and gas businesses, with an official announcement likely to come this week.

The move will need shareholders’ approval and other regulatory nod and the process could take two to three months.

Chairman Anil Agarwal said last month Vedanta will consider separately listing all or some of its businesses, in contrast to a failed attempt in 2020 to delist the company to speed up the process of simplifying its corporate structure.
Vedanta Resources, the parent of Vedanta Ltd, which has a debt load of $7.7 billion, has been struggling to raise funds due to ratings downgrades and concerns about meeting its debt obligations.

Agarwal had in November 2021 first spoken about a rejig of the corporate structure through demergers, spin-offs, and strategic partnerships.

The move is aimed at simplifying and streamlining the corporate structure, unlocking value for all stakeholders, and creating businesses that are positioned better to capitalise on their distinct market positions, deliver long-term growth and enable strategic partnerships. But that plan never took off.

Agarwal believes that the structure being evaluated is aimed to create businesses that are positioned better to capitalise on their distinct market positions and deliver long-term growth and enable strategic partnerships.

Earlier this year, Agarwal sought to trim down the group’s debt by getting Hindustan Zinc, a unit of Vedanta Ltd, to buy some of the parent group’s zinc assets in a $2.98 billion deal.

However, the Government of India, which owns nearly 30% stake in Hindustan Zinc, opposed the move.

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