Anil Agarwal-led Vedanta on Tuesday said it has completed the reorganization review and concluded that 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 and will continue with its existing structure.
Further, 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, in November last year, decided 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 capital allocation outlay across three large streams will be as under capital expenditure, dividend policy and inorganic growth.
The capex includes both growth and sustaining capex and substantive amount of this outlay will be in existing lines of operations with focus on volume augmentation, cost reduction, ESG and moving to value added products, which command higher margins.
Further, sustaining capex will be tracked on per ton basis and managed through annual operating plan exercise.
Vedanta said, minimum 30% of attributable profit after tax (before exceptional items) of company (excluding profits of HZL) will be distributed as dividend.
The company will also selectively invest in acquisitions, which are accretive to existing businesses or that have synergies with its core businesses.
The capital allocation policy will be the primary guiding factor for strategic acquisitions and the company said it will consider select mergers and acquisitions, within the overall capital allocation framework.
The company said it has proven expertise and successful track record of turning around acquired businesses and that it will participate in divestment program which has strategic fit with the portfolio.
Vedanta further said the bid for BPCL is at 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.
A specific fund, with a strategic investor will be set up to fund the potential investment, without leveraging Vedanta’s balance sheet.
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