London-based Vedanta to merge India businesses to cut costs

Feb 25, 2012, 12:27 GMT

New Delhi - London-listed mining major Vedanta Resources plc announced Saturday it was merging its India units to streamline business operations, improve cashflows and cut costs.

The merger of its mining companies, including India's largest iron ore producer Sesa Goa, would save the group 10 billion rupees (200 million dollars) annually, the company said in a statement.

The new entity, named Sesa Sterlite, would also have a 58.9 per cent share holding in oil and gas producer Cairn India and would be listed in India and on the New York Stock Exchange.

The consolidation is expected to create the world's seventh largest global diversified natural resources major, Vedanta said. the company hopes to complete the condolidation by 2012.

The consolidation, which is subject to approval by regulators in India and Britain, is expected to bring substantial benefits through economies of scale and increased flexibility in capital access and allocation, the company said.

'This consolidation will create value for all shareholders. It will lead to a simpler and more efficient structure,' Vedanta Group chief executive officer MS Mehta said.

'This is a clear attempt to unlock value. It is a good move from a one year or long term point of view,' Jagannadham Thunuguntla, head of reserarch at SMC Capital said.

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