Vedanta has said that it will not undertake any corporate restructuring, including demerger and spin-off, and continue with its existing structure.
The development assumes significance in the wake of Vedanta’s board in November last year deciding that the company should undertake a review of the corporate structure and evaluate full range of options and alternatives to unlock value and simplify the corporate structure.
“The board of directors of the company have discussed various important policy matters and made decisions. Company has concluded this comprehensive review with inputs from various experts and advisors,” it said.
The board of directors concludes that the current structure is optimal and is commensurate with the current scale and its diversified lines of businesses. Therefore, the company will not undertake any corporate restructure including demerger or spin off etc and will continue with its existing structure,” Vedanta Limited said in a filing to Bombay stock exchange (BSE).
The company will selectively invest in acquisitions, which are accretive to existing businesses or that have synergies with its core businesses, the filing said.
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 Bharat Petroleum Corporation Limited (BPCL) is at expression of interest (EOI) 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 Limited’s balance sheet, Vedanta noted.
The company 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 pass 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.
Company’s chairman 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.”