Vedanta Resources Plc has decided to delist Madras Aluminium Company (Malco). The Anil Agarwal promoted Vedanta owns 80% of Malco’s equity and has sent a proposal to its board to approve a delisting proposal under Sebi’s delisting guidelines. It will have to make an offer to Malco’s shareholders through a reverse book-building process. It will set a floor price while shareholders will be free to offer shares at a higher price. The price determined through the book-building process will be the final price, which Vedanta is free to accept or reject. Falling commodity prices have hit non-ferrous companies and their share prices have fallen as a result. What is bad for the industry may be good for a delisting exercise, as Malco’s share price is down by nearly a third from its price in end-July of Rs 145. Even if Vedanta has to pay twice the current market price, it will still pay a lower amount. Institutional shareholders hold the key to the offer price discovery, as they hold nearly 11% of the shares. The delisting move comes after a botched attempt to restructure its businesses in September 2008, after Vedanta’s investors protested. That proposal would have realigned the businesses of Sterlite and Malco, and led to a change in the promoter holding in both companies. Now, Vedanta will own 100% of Malco once the delisting is successful. In the quarter ended December 2008, Malco’s sales dipped by 8% to Rs 118 crore but it incurred a loss of Rs 7 crore, due to a sharp increase in manufacturing costs, relative to sales growth. LME aluminium prices were trading around $1,400 /tonne at the end of the December’08 quarter, down nearly 40% of their level a year ago. Malco also owns a 3.5% stake in Sterlite Industries and a 38.8% stake in India Foils.