Vedanta Ltd preparing to demerge sprawling operation, says report

By Anto Antony, Baiju Kalesh and Dinesh Nair

Vedanta Ltd. is nearing a deal to spin off businesses into several listed entities in a broad restructuring that, if successful, could help tycoon Anil Agarwal manage his metals-to-energy empire’s debt load, people familiar with the matter said. 

 

The company has informed its lenders of the restructuring and could announce the plans in the coming days, according to the people. Businesses including aluminum, oil and gas, iron ore and steel will be separately listed, they said, asking not to be identified as the information is confidential.

Vedanta Ltd.’s parent, Vedanta Resources, will remain the holding company, the people said. Deliberations are ongoing and no final decisions on the structure or timing of the de-merger have been made, they said. 

Resolving a byzantine corporate construct has been a priority for years for Agarwal’s indebted Vedanta Resources, but a global increase in borrowing costs has raised the stakes, with about $2 billion of bonds due to be redeemed next year.

The group’s August 2024 and March 2025 bonds are trading below 75 cents on the dollar, levels typically considered distressed. Moody’s Investors Service this week pushed the parent’s ratings deeper into junk, citing the elevated risk of debt restructuring over the next few months.

A streamlined structure could also help Agarwal hive off unprofitable or low-growth assets — something the billionaire has long avoided — while allowing investors to bet on some of the company’s newer ambitions, including in semiconductors.

Shares in Vedanta Ltd. have fallen by more than a fifth in Mumbai over the past 12 months, giving the company a market value of about 777 billion Indian rupees ($9.3 billion).

Representatives for Vedanta Ltd. and Vedanta Resources didn’t immediately respond to requests for comment.