Friday September 19, 2014


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Mining giant Vedanta to merge India units to cut costs, plans New York stock listing


MUMBAI, India - London-listed mining giant Vedanta Resources plans to merge its Indian subsidiaries to cut costs and list shares in the new entity on the New York Stock Exchange, the company said Saturday.

Vedanta said it would merge Sterlite Industries Ltd. with Sesa Goa Ltd. to create Sesa Sterlite. Consolidation should save the group 10 billion rupees ($200 million) a year, the company said.

It will offer three shares in Sesa Goa, India's largest iron ore producer, for every five existing shares in Sterlite, one of India's largest nonferrous metals mining companies.

The group's holdings in oil and gas producer Cairn India will also be consolidated within Sesa Sterlite, which will hold a 58.3 per cent stake in Cairn India after the transfer.

The company said Sesa Sterlite will be the world's seventh largest natural resources company by earnings, with exposure to zinc, lead, silver, iron ore, oil and gas, copper, aluminum and power and assets in India, Australia, Liberia, South Africa, Namibia, Ireland and Sri Lanka.

The consolidation needs shareholder and regulatory approval.

Sesa Sterlite will have a market cap of over $20 billion, making it one of India's largest listed companies, according to Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities.

"Vedanta Group stocks have historically got lower valuations due to complicated corporate structure. With this restructuring effort, there is an increased probability that the group may get positive rerating by the market," he said in an email.


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