Vedanta demerger: Newly demerged cos have potential to grow into $100 bn each: Agarwal

New Delhi: Vedanta Ltd Chairman Anil Agarwal said that he envisions that each of the demerged companies has the potential to grow into a $100 billion company. In a letter to shareholders, Agarwal reaffirmed the company’s commitment to unlocking value and driving India’s natural resources sector.

Vedanta’s proposed demerger will create four independent natural resource-focused entities with management structures, capital frameworks, and strategic priorities.

Agarwal highlighted the need for pure-play businesses and how the proposed demerger will help Vedanta achieve this. He emphasized that stakeholders will directly benefit from the company’s proposed move while Vedanta’s unique and irreplaceable assets, sector-leading position and financial discipline will ensure a stronger growth trajectory and higher return.

“I envision that each of the demerged companies has the potential to grow into a $100 billion company. 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.

“The current listed Vedanta Ltd entity will also continue to be a powerhouse in its own right. Among other things, it will hold over 63.4 per cent of Hindustan Zinc, the second largest integrated producer of Zinc and the 3rd largest producer of Silver in the world, and Zinc International, our entity in the African continent, which has even greater mineral resources than Hindustan Zinc has. Additionally, Vedanta Ltd will house our growing technology businesses and continue to act as an incubator for the group,” he added.

Agarwal likened the move to a banyan tree providing space for new growth. “I have always found that trees that grow under the shade of a giant banyan tree often find it difficult to grow. But once you take them out and allow them to grow under the sun, they show remarkable growth and progress. Vedanta is like that Banyan tree. The world today is all about pure-play businesses and Vedanta’s demerger will help us achieve that. Each of our demerged entities has the potential to grow into a Vedanta by itself. The time to act is now,” he said

The Vedanta Chairman said that the company’s proposed demerger has received overwhelming support from stakeholders, with 99.5 per cent of shareholders and creditors voting in favor of the plan. The company is committed to delivering on the vision.

“Vedanta delivered a dividend yield of 81 per cent during this period, the highest amongst all its peers,” he said.