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Things you need to know about Vedanta Resources ltd Delisting November 19 2020Market Update

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Things you need to know about Vedanta Resources ltd Delisting

The current market price is prevailing at 108.00 which is expected to go a bit more up. 52 weeks low indicates 60.30 and 166.05 on the higher side. Investors are looking forward to buy Vedanta shares as they believe Vedanta can be a good offer for short term trades.

The business is mainly owned by the Anil Agarwal family through Volcan Investments, a holding vehicle with a 61.7 percent interest in the company. One of the several Indian subsidiaries of Vedanta resources, Vedanta Limited (formerly Sesa Goa / Sterlite) operates iron ore mines in Goa. According to the rich list 2020 Agarwal’s net worth was estimated at £8.5 billion.

Introduction of Vedanta Company

In Patna, Bihar, India, Agarwal was born and raised. His father, Dwarka Prasad Agarwal, had a small business as an aluminium conductor. He studied at Miller High School, Patna, and instead of going to university, he decided to enter his father's business, making aluminium conductors. At 19, to pursue job opportunities, he left Patna and came to Mumbai. He never looked back from there on and he acquired many firms while working on making Vedanta resources amongst the best to reach at an enormous level gradually.

With its headquarters in London, United Kingdom, Vedanta Resources Limited is a global diversified metals and mining firm. It is India's largest mining and non-ferrous metals firm and has mining operations in Australia and Zambia and operations in three countries for oil and gas, Zinc, lead, silver, oil and gas, iron ore, steel, aluminum and electricity are its major products. In India, commercial power stations in Odisha and Punjab have also been built.

After INEOS Styrulution and Linde India, Vedanta is the third firm to make unsuccessful delisting attempts in last two years. The largest delisting in India so far was from Essar group that after paying Rs 3,745 crore in 2015, took Essar oil private. The price found at Essar oil was a 146% premium to the price bid.

How does Vedanta delisting work?

In the delisting process, a reverse book building process is initiated by company's promoters in which shareholders may tender their shares at a fixed price to be acquired by the promoters. The price discovered is the price tendered by shareholders at which the firm is able to meet the 90 percent stake threshold necessary to complete the delisting phase. Therefore the discovery price is the lowest price at which the company will complete the purchase of 90 percent of stocks.

What went wrong for VRL’s delisting?

Vedanta reported that instead of the 134 crore shares needed for the delisting phase to go through, it was able to gather offers for just around 125 crore shares. Earlier public records, however, show that offers of over 137 crore shares were received by Vedanta.  It was noted that this difference was due to the non-confirmation by international shareholders of some share purchase deals.

The attention of Vedanta shareholders had again turned to operating efficiency and capital allocation after the delisting debacle, which they hope would make money for them in the long run.

Vedanta will require the board's permission to delist. The meeting is scheduled via a special resolution adopted by postal vote, the corporation would then require approval by minority shareholders. This will include voting in favour of the delisting plan at least twice.

Future expectations

In the January-March portion, Vedanta Ltd will struggle to cover its cash needs, and this cash deficit may deteriorate further by September 2022. Significant upcoming debt maturities and the negative free cash flow of VRL in FY2021 may raise the likelihood that liquidity will run out . If Vedanta had completed the delisting process, it would have given the company complete control of its cash-rich subsidiaries, Hindustan Zinc Ltd (HZL) and Cairn India Holdings Ltd, to send funds through dividend outgoings and corporate loans.

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INDIRA SECURITIES PVT.LTD. (SEBI REG.NO.):NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000 SEBI REG. NO.: INZ000188930, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG. NO.: IN-DP-90-2015, CIN : U67120MH1996PTC160201




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