The Vedanta Group has invested around $8 billion in its growth projects. The group will also commission the world’s largest alumina refinery at Lanjigarh. The $10 billion near-term EBITDA includes $ 4.2 bn from Aluminium, $2.7 bn from Zinc India (Zinc and silver), and $0.9 billion from oil and gas, according to a presentation shared by the fund managers.
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Growth projects under execution include capacity expansion at the Lanjigarh alumina refinery from 3.5 to 5 MTPA, BALCO smelter from 0.6 to 1 MTPA, raising the overall power generation capacity from 2.9 GW to 5 GW, and doubling the Gamsberg phase 2 capacity from 250 to 500 KTPA, among others.
The Group’s plans make it well-positioned to capitalize on India’s economic growth as the country’s Gross Domestic Product (GDP) is expected to grow at a healthy rate, reaching $7 trillion by 2030, according to the presentation.
Vedanta has proposed a vertical split of the businesses and will list five entities on the stock exchanges, which is expected by the end of this year. As per the plan, for every one share of Vedanta Limited, the existing shareholders will additionally receive one share of the five newly listed companies. The demerger will create independent pure-play companies in the Aluminium, Power, Base Metals, Oil & Gas and Steel and Ferrous, while Zinc and other existing businesses will remain under Vedanta. Early this month, the State Bank of India granted its consent to Vedanta’s proposed demerger.“Considering the metal’s relevance, one can expect a sizeable growth in the business going forward,” said an analyst, adding that Vedanta is well placed to benefit from the ongoing boom in commodities.Also Read: Why Anil Agarwal is breaking up the empire he built on metal and a mine of ambition
Vedanta shares have rallied 75% in the last three months, significantly outperforming the Sensex by a wide margin of 68%.
Another investor who visited Vedanta’s onshore oil field at Barmer (part of Cairn Oil & Gas) and the Zinc underground mines at Sindesar Khurd echoed similar views. “With commodities at multi-year highs, these Vedanta projects stand to benefit as demand will remain strong on the back of the high economic growth that we are witnessing,” he said.
