The demerger of the metals-to-oil conglomerate Vedanta Ltd aims to enhance focus, unlock value, and ensure cash returns continue without disrupting its capital expenditure cycle, he stated in an interview with PTI.
On Tuesday, the National Company Law Tribunal (NCLT) approved the plan to separate Vedanta into five distinct listed entities. Following the demerger, the base metals division will remain under Vedanta Ltd, while Vedanta Aluminium, Talwandi Sabo Power, Vedanta Steel and Iron, and Malco Energy will collaborate on the oil and gas segment as the other four entities.
“Dividends run through my veins,” he reiterated. “Regardless of circumstances, our companies will consistently distribute dividends.” Vedanta continues to be one of India’s leading large-cap dividend-yielding stocks, with dividends forming a significant part of shareholder returns in recent years.
Dividend declarations for the 2025-26 fiscal year include a first interim dividend of Rs 7 per share (totaling Rs 2,737 crore) and a second interim dividend of Rs 16 per share (totaling Rs 6,256 crore).
In FY 2023-24, Vedanta declared a cumulative dividend of Rs 29.50 per share through multiple interim dividends, while the total payout for FY 2024-25 was approximately Rs 46 per share.
Agarwal mentioned that the demerger is targeted for completion by March 2026.
Discussing growth strategies, he revealed Vedanta’s ambitious expansion plans across its operations.
A total investment of USD 20 billion is planned over the next 4-5 years — USD 4 billion each in oil and gas and aluminium, USD 2 billion in zinc and silver, USD 2.5 billion in power, with the remainder allocated to iron ore, steel, and other ventures.
Agarwal indicated that silver production is expected to more than double to 1,500 tonnes by 2030 from the current approximately 700 tonnes, to satisfy domestic demand in India. Additionally, lead production is projected to increase to 2 million tonnes annually from the current 400,000 tonnes.
Current zinc production of 1.13 million tonnes is set to expand to 2 million tonnes at Hindustan Zinc Ltd, with an additional 1 million tonnes expected from Vedanta’s zinc operations in South Africa, positioning the company among the globe’s largest producers.
In aluminium, Vedanta aims to double its capacity from the current 3 million tonnes, bolstered by captive mines and renewable energy-linked greenfield initiatives. The establishment of a 510,000 tonnes DAP fertiliser plant in Rajasthan is also underway, with plans for expansion to 1 million tonnes in the near future, he noted.
Regarding oil and gas, Agarwal stated that recent governmental policy changes have enhanced the investment environment. Vedanta’s production goal is to reach 300,000 barrels per day in the short term, scaling up to 500,000 barrels per day over the next four to five years.
The iron ore and steel sector will concentrate on producing green steel, leveraging access to gas and renewable energy, with a proposed capacity of 15 million tonnes. The power segment aims for a total of 25,000 MW capacity, including 15,000 MW of thermal and 5,000 MW of renewable energy. The group currently operates a thermal power capacity of 4,200 MW.
“Capital expenditure is crucial for manufacturing growth in India, and we are devoted to our aggressive spending strategy,” he stated.
Agarwal noted that opting for a demerger over asset sales or alternative restructuring was essential to unlock the full growth potential of each sector, including zinc, aluminium, oil and gas, power, and iron ore and steel amid robust and growing demand, particularly in India.
“Vedanta resembles a vast Banyan tree. Each sector has enormous potential, ready to evolve into individual Banyan trees,” he said. “My vision is that every company will match Vedanta in revenue. Essentially, we are creating five additional Vedantas, much to the delight of our shareholders.” Shareholders will receive one equity share of each demerged entity for every one share they currently possess in the company.
Justifying the demerger, he explained that globally, most significant resource companies function as pure-play organizations, concentrating solely on zinc, silver, aluminium, iron ore, power generation, or oil and gas, and Vedanta’s planned restructuring aligns with this global trend.
“Each of Vedanta’s sectors – zinc, silver, aluminium, oil and gas, power, iron ore, and steel – holds vast potential. Demand is nearly doubling, especially in India. The demerger is the correct approach, allowing each sector to flourish independently,” Agarwal stated.
Addressing the issue of debt, he mentioned that the Rs 48,000 crore debt will be distributed among the demerged entities according to their respective cash flows.
Each resulting company will have its independent board and professional management, with promoters retaining around a 50 percent stake without being involved in daily operations, Agarwal mentioned, assuring that aggressive capital expenditure and regular dividend distributions will continue after the demerger.
In terms of structure, he affirmed that all resultant companies will operate as pure-play entities. The oil and gas segment will be a standalone hydrocarbon company, iron ore and power will function as single-product entities, while metals sectors may seek future vertical expansion.
