For investors, everything is there plus more: Anil Agarwal on demerger plan

Billionaire Anil Agarwal’s Vedanta Ltd is considering a demerger of its Aluminium, Iron & Steel and Oil & Gas businesses which will be run as standalone listed entities with separate leadership as part of its value unlocking process. The group is not a stranger to corporate restructuring, having merged in the 2018s and now proposing to demerge the businesses for value creation. Investors will have multiple benefits, said Vedanta’s chairman Anil Agarwal. He is currently in the Emirati kingdom for the Dubai Expo spoke to ET’s Satish John and Bhavya Dilipkumar.

Edited Excerpts.

Mr Agarwal can you explain the idea behind the restructuring process?

We have decided to demerge some of our businesses. They deserve to be independent to grow and create value. Aluminium like Hindalco, oil and gas like ExxonMobil and steel and iron ore businesses such as JSW Steel is the vision we have too. We are heading towards that…

What are some timelines on how soon this restructuring will take shape?
At this point, we are evaluating and have appointed the best of advisors and they will come out with the entire plan. In a very short span, we will announce the full scheme. The intent is to announce the full process, in the next 2-3 months. I’m not sure, but we are hoping this will happen very soon.

What is the reason for this demerger? Is it justifiable for a shareholder?
If you look at oil and gas it is always independent business iron ore and steel is always an independent business. And aluminium business has always been an independent business. In India also, if you see, Hindalco and Nalco. They all are independent. It is good for the shareholder because for one share (in Vedanta) they will get 4 shares (of companies.) It is important to make the company independent.

After restructuring, what are companies will Vedanta Ltd hold?
Shareholding in Hindustan Zinc and Balco, we will hold the ferroalloy business. We (Vedanta Ltd) will have 3-4 companies. These companies will demerge and we will continue to hold the same shares. Within the four walls, nothing will change as far as shareholding, except shareholders, will hold different companies’ shares.

Will there be any strategic investors for this?
At this point, we are not looking at any strategic investors. This scheme does not have any strategic investors.

Do you think this will be the right solution for increasing the company’s valuation?
See, this is very natural, just coming out of the bag. It is natural to make these businesses independent so they can grow. And we wanted to delist, but we have increased our shareholding to around 65% so one purpose is solved.

Commodity cycles for these businesses are different so will investors have more options now?
The investors will have options. Someone who wants iron can buy iron and steel business. And they get more flexibility.

The initial delisting price was around Rs 87.5, a share. A lot of things have changed. Do you still feel Vedanta share price has not gotten fair value from the market?
That is for the market to assess but the performance of the company was phenomenal.

Will you be pursuing the PSU Companies that are getting privatised. And what are the updates on Hindustan Zinc and Balco’s government holding?
So far nothing has happened, no date has come for bids. As and when it comes, we will explore the opportunity. Regarding HNZ and Balco, if the government decides to do it, we will pursue it.

How do you expect investors to react tomorrow to this announcement?
For them, this is a win-win. For them, everything is there plus more, a four-time advantage to access the company fortunes.