Vedanta Ltd. has incorporated a wholly owned subsidiary, Vedanta Iron and Steel Ltd., as part of its plan to spin off separate listed companies.
The objective and impact of the acquisition are “for the purpose of implementation of demerger scheme as intimated”, the company said in its exchange filing on Thursday.
Vedanta Iron and Steel was incorporated on Oct. 10 and has an authorised capital of one lakh equity shares of Rs 1 each.
This move comes after Vedanta announced its plan to demerge its existing business verticals into six independent companies: Vedanta Aluminum, Vedanta Oil and Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta
"By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical," Agarwal said in a statement during the demerger announcement.
However, analysts are divided on whether the demerger of Vedanta's diversified businesses would unlock value.
Earlier, Vedanta Group Chairperson Anil Agarwal said that the company will repay about $4.9 billion through the strategic sale of its iron ore and steel assets.
"Even though we have the option to carry this debt further, the sale would allow us to have the option of becoming a zero-debt company," Agarwal told BQ Prime's Sajeet Manghat in an interview.
On Wednesday, India Ratings and Research downgraded Vedanta Group's Long-Term Issuer Rating to ‘IND AA-' from ‘IND AA', while maintaining a negative outlook, citing increased liquidity risk and reduced financial flexibility.
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