Vedanta drops restructuring plan

Mumbai: Non-ferrous metals major Vedanta Resources announced shelving of its proposed group restructuring programme, which was intended to simplify its present corporate structure and eliminate conflicts of interest between the different group companies.

The company said its decision to drop the restructuring proposal was in view of the recent changes in global financial markets and investor feedback. It, however, did not elaborate on how the changes in global financial markets would affect its restructuring programme.

'Vedanta remains committed to simplifying and streamlining its corporate structure in the interests of all shareholders,' it added.

Company sources, however, said the decision would not stop its expansion programme. Vedanta has drawn up plans to invest $9.8 billion (over Rs 43,000 crore) to increase its aluminium production to 2.6 million tonnes a year per annum and emerge as the world's fifth largest aluminium producer by 2012.

Vedanta had unveiled its restructuring programme on September 9 - it was to have been effective from April 1, 2009. Under the programme, the group planned to have three commodity-based verticals: copper, zinc and lead; aluminium and energy; and iron ore.

Its group company Sterlite Industries was to have de-merged its aluminium and energy businesses to Madras Aluminium Co (Malco), which was subsequently to be renamed as Sterlite Aluminium Ltd. Further, Vedanta was to transfer its 79.4 per cent equity interest in its mining subsidiary Konkola Copper Mines (KCM) to Sterlite.

After the restructuring, Vedanta was to have three companies under its fold - Sterlite (which was to have Hindustan Zinc Ltd, CMT and KCM), Vedanta Aluminium Ltd and Sesa Goa.

An analyst said that the Vedanta move to drop the restructuring plan was positive, given that the investor confidence had been shaken by its proposal. Mr Niraj Shah, an analyst with Centrum Broking, said the restructuring was favourable to Vedanta shareholders, but not for their counterparts in Sterlite.