Vedanta, which has underperformed the sector by more than 25 percent since the start of last year, has over a dozen units, none fully owned and several separately listed, producing oil to aluminum and copper to zinc.
The consolidation is expected to lead to significant synergies, including economies of scale, more efficient movement of group cash, improved allocation of capital and corporate cost savings including tax efficiencies, Vedanta said.
Vedanta said, as a first step, it will merge non-ferrous metals producer Sterlite Industries into sister concern and iron ore miner Sesa Goa.
The boards of the companies have approved the issue of three shares of Sesa Goa for every five shares held in Sterlite.
Its unlisted unit Vedanta Aluminium, along with Madras Aluminium Co, will then be transferred to the merged company, to be named Sesa Sterlite.
Vedanta’s 38.8 percent holding in oil and gas producer Cairn India, which it acquired last year, will be transferred to Sesa Sterlite, along with related debt of $5.9 billion.
Sesa Goa already holds 20 percent in Cairn India directly.
The group’s holding in Hindustan Zinc and Bharat Aluminium Co Ltd, in which the government also holds a part stake, will remain separate of the merger.
After the share transfer, Sesa Sterlite would be listed in India and also list American Depositary Shares in New York.
Vedanta, which will own 58.3 percent in Sesa Sterlite post-restructuring, now controls about 55 percent each in Sterlite Industries and Sesa Goa.
“This transaction is a natural evolution, leading to simplification of the Group’s structure,” Vedanta Chairman Anil Agarwal said in a statement. “Sesa Sterlite will be the principal operating company in the group… and is well placed to create value for all shareholders.”