Date:10/09/2008 URL: http://www.thehindu.com/2008/09/10/stories/2008091056221800.htm

Business

Vedanta creates 3 commodity verticals

Special Correspondent

Plans Rs. 75,000 crore capex; will be among top five global aluminium producers

— PHOTO: SHASHI ASHIWAL

UNLOCKING VALUE: Anil Agarwal (left), Chairman, with Kuldip Kumar Kaura, Managing Director and CEO, Vedanta Resources, addressing a press conference in Mumbai on Tuesday.

MUMBAI: Vedanta Resources on Tuesday announced a restructuring exercise to simplify its corporate structure and eliminate cross holdings among group businesses. It will organise the group corporate structure into three commodity focussed verticals — copper and zinc-lead; aluminium and energy; and iron ore.

Scheme of arrangement

The respective boards of Vedanta and group companies, Sterlite and Madras Aluminium Company (Malco) have approved the restructuring scheme to be effective from April, 1, 2009. Accordingly, Sterlite will demerge its aluminium and energy businesses to Malco(to be simultaneously renamed Sterlite Aluminium) and Vedanta will transfer its 79.4 per cent equity interest in Konkola Copper Mines (KCM) in Zambia to Sterlite.

As per the scheme, Malco will issue equity shares to shareholders of Sterlite in the ratio of seven shares of Rs. 2 each of Malco for every four equity shares of Rs. 2 each held in Sterlite. Sterlite will issue one fully paid-up equity share of Rs. 2 each in exchange for one equity share of one cent (one hundredth of a dollar) each of KCM, a wholly-owned subsidiary of Vedanta and Sterlite will issue equity shares to shareholders of Malco in the ratio of one equity share of Rs. 2 each of Sterlite for every 51 equity shares of Rs. 2 each held in Malco.

The restructuring scheme envisages demerging Sterlite’s equity interests in Bharat Aluminium Company (Balco), Vedanta Aluminium (VAL) and Sterlite Energy (SEL) to Malco (to be renamed Sterlite Aluminium), merging Malco’s holding in Sterlite into Sterlite, merging Vedanta’s holding in KCM into Sterlite and merging Vedanta’s holding in Malco into VAL. The company has a capital expenditure plan of Rs. 75,000 crore in the next three years and it has already invested Rs. 40,000 crore in the last three years.

According to Anil Agarwal, Chairman, Vedanta, Rs. 30,000 crore is available in the company’s Balance Sheet and Rs. 45,000 crore will be raised through internal accruals. The company will generate Rs. 20,000 crore annually over the next three years.

Post-restructuring, Vedanta will hold 73 per cent in Sterlite, 85 per cent in VAL and 51 per cent in Sesa Goa. Sterlite will hold 100 per cent in Asarco and Copper Mines of Tasmania (CMT) and 64.9 per cent in Hindustan Zinc and 79 per cent in KCM. VAL will hold 61 per cent in Sterlite Aluminium, which holds 51 per cent in Balco and 100 per cent in Sterlite Energy.

Vedanta Aluminium (VAL) and Sterlite Aluminium (Aluminium and Energy) will be among the top five global aluminium producers by 2012 with a capacity of 2.6 million tonnes annually with a capacity to develop India’s abundant bauxite and coal reserves. In three years, the aluminium capacity will go to 3.6 million tonnes annually. The company’s power capacity is now 2,190 MW and post-expansion this would go to 5,370 MW by 2012 at a capital expenditure of around Rs. 12,000 crore.