Vedanta Demerger Updates: The business of Vedanta Ltd, the country’s leading mining and metal company, is going to be divided. The much awaited demerger of Vedanta Limited has now entered the final stages. The National Company Law Tribunal (NCLT) had reserved its decision on this matter in November and the decision is expected in December. After the demerger, the existing shareholders of Vedanta Limited will now get shares of companies from 5 different sectors instead of a single stock.
This demerger plan of Vedanta was announced in June 2024, but it was delayed due to objections from the Ministry of Petroleum and Natural Gas. The ministry had raised objection against the company citing pending claims of Rs 16,700 crore.
What will change under demerger?
Vedanta Limited currently operates in many sectors like Oil and Gas, Aluminium, Zinc, Copper, Power and Iron Ore. After the demerger, the company will split these different segments into 5 new listed entities. All new companies will be listed separately in the stock market.
1. Vedanta Aluminum Ltd
2. Vedanta Oil & Gas Ltd
3. Vedanta Power Ltd
4. Vedanta Iron & Steel Ltd
5. Vedanta Base Metals Ltd – It will remain the parent Vedanta Limited and will continue to function as the main listed company of the group. Base metals business will remain under this.
What will the shareholders get?
According to the company, investors who currently hold shares of Vedanta Limited will get shares in the new units in 1:1 ratio, that is, if you have one share of Vedanta Limited, after the demerger you will get one share of each new company. In this way, investors will have a total of 5 shares in their hands – 1 of the parent company and 4 of the new units.
Benefit of value unlocking
The biggest advantage of demerger is value unlocking. Currently, Vedanta’s total business is under one roof, due to which the real value of each segment is not visible in the market. Post demerger, each business will be able to achieve different value based on its potential and growth prospects.
Potential benefits for investors
- Clear focus: Every company will be able to stay focused on its core business.
- Value Unlocking: The real value of different businesses can be accurately assessed in the market.
- Reduction in risk: Investors will now hold stakes in many industries of the same group.
- Improvement in corporate governance: Transparency in operations of separate companies will increase.
Market experts believe that this step can be beneficial for Vedanta shareholders in the long term.
When will the demerger be completed?
Vedanta Group has said that this process will be completed after regulatory approvals. This demerger is likely to be completed by March 2026.
