Thread by @jaganmsna

Vedanta Delisting proposal - A thread.
Disc- Quoting some information out of what I remember, so please cross check .
1. Year 2002. Sterlite Industry, which was just a copper smelter , bidder successfully for Balco and then HZL but stock was very poorly valued.

2. It was not about Sterlite. Entire Commodity index at probably a two decade low, post 1997 Asian Crisis. But China growth theme was building and Sterlite Management rightly acquired Balco + HZL

3. Realising that Sterlite post HZL and Balco buys was dirt cheap, mgmt tried to delist. Got 87% shareholders to accept a low open offer price. But failed ,as LIC (among others refused to Tender)

4. Sterlite continued to be listed, but parent moved to London, as Vedanta Resources PLC.
Thr stock started moving from 2003 and rose stratospherically over next 7 years

5. In next 10 years - 2003 to 2013, lots happened in Sterlite India. They acquired Sesa Goa, and Cairn India .And renamed as Vedanta India

6. The Cairn India buy was at 100$ oil so the parent Vedanta PLC took lot of debt. Unlike HZL buy (which was dirt cheap).
And by 2016, Oil crashed and Cairn India reserves needed to fund interest payment. So Cairn India merged with Vedanta India

7. Vedanta India stock was a perfect tracker of World commodity index. Probably most Diversified commodity producer in India , Oil + Zinc+ Aluminium plus lot of iron ore..
This is around 2017.

8. 2018 they r into Steel as well , Electrosteel Steel acquired.
But the stock always traded cheap, as commodity stocks never got premium valuation (across world ) post 2010

9. What makes Vedanta India interesting is - Parent has debt so Vedanta India pays good Dividend. And the dividend money comes from its 64% holding in HZL. So it goes..

10. Attempt to delist HZL failed as due to courts, Guvt could not sell it's balance 26% or so stake in HZL . Plus of course, Guvt also happy to get good dividends from HZL

11. HZL is to Zinc what Saudis are to Oil. Probably among lowest cost Zinc producer in world. Oldest too. History records Zinc being produced around their Rajastan mines for millenia..

12. So Vedanta India pays dividends out of compulsion
Btw Vedanta s original biz, Copper Smelter , got closed in 2018, after huge conflict+riots in Tuticorin.Copper smelting is probably 2-4% of revenues so it's largely irrelevant.

13. Now Vedanta India is apparently trying to Delist. Obviously they want to take advantage of dirt cheap valuation in a business that owns most of World's best Zinc Mines

14. Vedanta India parent Vedanta PLC was listed in London in 2000s . Went private in 2018 after many controversies. But guess they wanted to just reduce public gaze plus take out parent cheap.

15. Now wrt Vedanta India delisting plan - Looks like promoters own around 50% of stock.
Unlike in 2002, when they owned 70+%

16. LIC owns a happy 6.3% and quite many MFs own, as it is one rare dividend paying Commodity stock.

17. So IMO it's going to be extremely tough for promoters to delist. DIIs of India will resist.
Unless, they offer say 3-5x of current price. Will they?

18. Even if at all they delist, the business will continue to need to pay Dividends. In theory they can delist if all DII agree, do reverse stock split and push minority stockholders. But being widely held by DIIs it is very tough

19. So nothing to panic IMO, they (promoter) will probably need something to set a floor on stock price. Delisting could be one. Stock at CMP dirt cheap, unless one thinks Zinc will stop being used in this world.

20. Addendum - The Vedanta Group promoter owns Sterlite Technologies(India Listed) and one of the two India listed InvIT. Could be good to study them.

21. Last not least, do feel free to cross verify information here , before u invest or divest Vedanta Ltd . - End