Vedanta finishes re-organisation review; says current structure is optimal

Billionaire Anil Agarwal-led Vedanta on Tuesday said it has completed the re-organisation review and concluded that the company’s current structure is optimal and is commensurate with the current scale and its diversified lines of businesses.

It also added that due to the above reasons, the company will not undertake any corporate restructure including demerger/spin off etc. and will continue with its existing structure.

However, the company has announced a capital allocation policy that is along the lines of a consistent, disciplined, and balanced allocation of capital with long term balance sheet management.

Vedanta will selectively invest in acquisitions, which are accretive to existing businesses or that have synergies with its core businesses, according to the regulatory filing.

The capital allocation policy will be the primary guiding factor and the company will focus on organic growth, it informed.

The company will consider select mergers and acquisitions within the overall capital allocation framework, Vedanta said, adding that it has proven expertise and successful track record of turning around acquired businesses.

The company, the filing said, will participate in divestment programme which has strategic fit with the portfolio.

The bid for BPCL is at EOI (Expression of Interest) stage and in case the transaction culminates, the company may undertake management of the acquired business, through appropriate profit-sharing arrangement or on management fee model, it said.

A specific fund, with a strategic investor will be set up to fund the potential investment, without leveraging Vedanta Ltd's balance sheet, it noted.

It further said that its dividend policy is both succinct and elaborate at the same time. Minimum 30 per cent of attributable profit after tax (before exceptional items) of company (excluding profits of Hindustan Zinc Ltd (HZL)) will be distributed as dividends, it added.

Dividend from Hindustan Zinc will be passed through within six months. This is subject to the board's evaluation of various factors such as robustness of cash flows, economic situation, commodity price cycles, natural calamities, etc, for overall optimal cash management, Vedanta stated.

Commenting on the decision, Anil Agarwal said, “We will continue to focus on operational performance to enhance profitability and free cash flows. We are committed to right levels of leverage and strong balance sheet to maximise shareholders value."

In November last year, Vedanata had decided that it should undertake a review of the corporate structure and evaluate full range of options and alternatives to unlock value and simplify the corporate structure.