The four new companies formed after the restructuring of Vedanta have the potential to be $100 billion firms each, chairperson Anil Agarwal has said in a letter to shareholders. He has also highlighted the potential of the natural resources sector, both in India and global economies.
“While Vedanta currently contributes close to 1.4% to India’s GDP, there is a need for many more Vedantas to step forward to realise the sector’s true potential,” Agarwal wrote.
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He said that the demerger process will help in this direction through the creation of four new natural resource-focused entities each with independent management, distinct capital structures, and assets, which will additionally result in the creation of a large number of downstream industries and a huge number of new jobs.
In September 2023, the Vedanta board had approved the proposed restructuring plan, which will result in the company being split into five, each in different sectors where Vedanta has presence. The four new companies — Vedanta Aluminium, Vedanta Oil and Gas, Vedanta Power, and Vedanta Iron and Steel — will be eventually listed on the stock exchanges.
Vedanta Limited will house zinc and silver producer – Hindustan Zinc and will also as act an incubator for new businesses, including Vedanta’s technology verticals, the company said. Vedanta’s parent, Vedanta Resources, will continue to be the holding company.
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“If you look at where we are headed as a global economy and the demand for such products, these companies and their products are the need of the hour,” Agarwal said.
Last month, the company received approvals from shareholders and creditors for the proposed restructuring.
Comparing the contribution of natural resources as a sector to nations’ GDP worldwide, Agarwal observed that while the sector contributes 3% to the overall GDP in India, less than 20% of the country’s natural resources potential has been explored, giving way to an ample opportunity for growth.
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