Vedanta wanted to reorganise its corporate group structure into three commodity

Tag : lead,copper

Anil Agarwal-promoted metals & mining company  didnt reveal what investor feedback it received. Butmarket sources say investors of group firm Sterlite Industries sawits profits thinning once aluminium and energy businesses weredemerged to Madras Aluminium Company (Malco), another groupcompany, as planned.
Shares of Sterlite Industries had fallen 7.5% to Rs 575.70 onSeptember 9 on the Bombay Stock Exchange (BSE) following theannouncement to restructure group businesses. The following day(Sep 10) the stock tanked 11.8% to close at Rs 507.90 and, on Sep18, touched a 52-week low of Rs 405.
However, following Vedantas decision to drop the restructuringplan, shares of Sterlite Industries were up on Wednesday (Sep 24)by 8.36% to close at Rs 487.55 on the BSE. Analysts believe theSterlite stock would now rebound to its earlier price of about Rs600-Rs 650. Malco shares were also up by 4.98% to close at Rs128.55 on the BSE on Wednesday.
Vedanta remains committed to simplifying and streamlining itscorporate structure in the interests of all shareholders, thecompany said in an e-mail statement.
The company wanted to reorganise its corporate group structure into three commodity focused verticals: copper & zinc-lead (SterliteIndustries), aluminium & energy (VAL and Sterlite Aluminium) andiron ore (Sesa Goa). Moreover, Sterlite would demerge its aluminiumand energy business to Malco and Vedanta would transfer its 79.4%equity interest in Konkola Copper Mines to Sterlite. Also, expertsfelt that the restructuring would take the fizz out of Sterlite, asaluminium and energy were the two most effective and profit makingbusinesses it had, and taking these out this would hit thecompanys margins.
Vedanta chairman Anil Agarwal, in an interview to a televisionchannel, said, It was fundamentally because of the market. We findthere is no point pursuing it because the rationale wouldnt beunderstood by the market and also there was a mixed reaction aboutputting the African assets into Sterlite. When the whole world iscollapsing, the best decision we have taken is not to pursue it atthis point of time. But we are definitely committed to simplifyingour structure.
Experts believe this decision is positive for both investors andthe company.