Notwithstanding unfavorable economic conditions around, there is one company that is still projecting a positive picture in the metal market. The London Stock Exchange-listed, Anil Agarwal’s Vedanta Resources has given a sturdy outlook for commodity markets, despite low aluminium price, a weak Indian rupee and ever increasing cost of production. The company is working on taking up a number of investments, expansion and tie ups despite the weakening market condition.
On 25 February, Vedanta Resources announced restructuring of a part of its operations. It is reported that all its subsidiaries, except Konkola Copper Mines, are to be merged into Sesa Goa and post-restructuring, a new entity is to be carved out. Accordingly, Sterlite Industries (India) Ltd, Sesa Goa Ltd, Madras Aluminium Company Ltd, Cairn India and Vedanta Aluminium—all subsidiaries of the Vedanta Resources are to be merged into a new company- Sesa Sterlite. In the new structure, Sesa-Sterlite will be the operating company with all assets within them and it will lead to a simpler and more efficient structure.
On June 19, the shareholders of Sesa Goa approved the merger of the two companies and the shareholders of Sterlite Industries voted in favor of the merger on June 21. Smooth voting result made the transformation process easier. It is mentioned that the new company would come into functioning once it gets court approvals and the consent from the Foreign Investment Promotion Board. Post merger, Vedanta will hold 58.3% stake in Sesa-Sterlite. According to the agreement, Sterlite shareholders will get three shares of Sesa Goa for every five shares held according to the swap ratio. According to analysts, the merger will help Vedanta shed the debt burden by about 61% to $3.8 billion. However, Sesa -Sterlite would be burdened with a total debt of about $14 billion.
Mr. Anil Agarwal, Chairman of Vedanta has said that “Sesa Sterlite will be one of the largest global diversified natural resources majors, supporting country’s industrial growth… Sesa Sterlite will be the principal operating company in the group and with its high quality assets, growth projects and strong management; it is well placed to create value for all shareholders.” Apparently, the huge debt of Vedanta Aluminium which got transferred into the new company has been a cause of concern for some investors. But, the transaction would be beneficial for Vedanta with its debt levels coming down to a considerable extent.
EBITDA has already listed Sesa Sterlite as the world’s seventh largest diversified natural resources major. Sesa-Sterlite, with a market capitalization of Rs 1, 24,000 crore, will be among the top 10 Indian companies. The advantage being probably targeted is that the merged company could deal with a wide range of natural resources like zinc-lead-silver, iron ore, oil & gas, copper, aluminium and get commercial access to assets located in India, Australia, Liberia, South Africa, Namibia, Ireland and Sri Lanka.
The merged Sesa Sterlite will also add some important assets to its kitty through its high-profile subsidiary Vedanta Aluminium, which could be favorable for the transaction. Vedanta Aluminium recently acquired stakes in Raykal Aluminium promoted by Larsen and Toubro. This will give it access to two bauxite deposits with extensive reserve and provide assured supply of raw materials for its troubled Lanjigarh Alumina plant.
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Its amazing to see tremendous & outstanding growth of the company led by the greatest Shri Anil Agarwal ji. All Indians must be proud of him.
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