London-listed mining heavyweight Vedanta announced Saturday it was combining its two main Indian subsidiaries into a metals giant that will have a market capitalisation of over $20 billion. Under the restructuring to streamline Vedanta\'s complex operations and cut costs, metals producer Sterlite Industries will merge with iron ore miner Sesa Goa, creating one of India\'s biggest firms with annual revenues of $14.2 billion. The new company, to be known as Sesa Sterlite, will create an \"Indian natural resources champion\", said Vedanta\'s billionaire chairman Anil Agarwal, known as \"the metals king,\" who started his career in Mumbai as a scrap dealer. \"This transaction is a natural evolution, leading to simplification of the group\'s structure,\" Agarwal told a televised news conference in Mumbai, India\'s financial hub. \"We will have one company, Vedanta, which will be the holding company and have one operating company, which will be Sesa Sterlite,\" said the Britain-based mining magnate who grew up in India. \"This is the new baseline.\" The transaction will be carried out through an all-share deal in which three Sesa Goal shares will be issued for every five Sterlite shares, the company said in a statement. Investors have long complained that Vedanta\'s structure with over a dozen subsidiaries is too fractured and demanded an overhaul to produce economies of scale. But a similar attempt to streamline Vedanta\'s operations four years ago failed after investors objected to valuations of some of the company\'s assets. Sesa Sterlite, whose activities will straddle all major resources from oil, iron ore, aluminium, copper, zinc and lead, \"is well placed to create value for all shareholders,\" Agarwal added. The new corporate behemoth is expected to be the seventh largest global natural resources company by earnings and its shares will be listed in India and in New York. The merger will create \"significant synergies\" generating cost savings of $200 million a year and the new company will have a market capitalisation of $20 billion, Vedanta group chief executive M.S. Mehta said. The restructuring is expected to be completed by the end of 2012, subject to regulatory approvals, Mehta said. \"This removes all uncertainties that were there regarding the organisational structure and this will create a big resource house,\" Rakesh Arora, managing director and head of research at Macquarie Capital Securities, told NDTV Profit. Other Vedanta group companies, Vedanta Aluminium and Madras Aluminium Company, will be folded into Sesa Sterlite along with Vedanta\'s holding in energy explorer Cairn India. The move will reduce the debt of Vedanta which paid $8.7 billion last year to acquire a majority stake in Cairn India. Vedanta will transfer its holding in Cairn, including a debt of $6 billion, to the new firm, cutting its own debt. Vedanta, whose shares have been among the worst-performing of mining stocks listed on the FTSE 100, has been seeking to improve its debt profile after its bond rating was downgraded. Vedanta\'s total debt stands at close to $10 billion on which it has interest payments of about $500 million but by shifting its debt to Sesa Sterlite, the cost of servicing its debt will fall to just under $200 million. \"The major beneficiary of the restructuring is the Vedanta group,\" said independent market analyst Sanjiv Bhasin.