Vedanta's Demerger One Inch Closer; NCLT Gives Green Signal For Key Step - Detail

Vedanta Ltd. is one step closer to its planned demerger, as the Mumbai bench of the National Company Law Tribunal (NCLT) has cleared the way for meetings of the company’s creditors and shareholders. The NCLT has directed Vedanta to call for these meetings within the next 90 days to discuss the proposal, which is set to create independent companies from its diverse business segments.

Demerger to Create Independent Companies in Key Sectors
The proposed demerger will split Vedanta's operations into separate companies. These new entities will focus on specific sectors, including aluminum, oil and gas, power, steel, ferrous materials, and base metals. Meanwhile, Vedanta Ltd. will retain ownership of its existing zinc business and newly incubated ventures. The company hopes this restructuring will simplify its corporate structure and provide clearer opportunities for investors. It is also expected to allow each business unit to pursue its strategic goals more effectively, aligning better with market demands and investment cycles.

Key Milestone in the Demerger Process
The decision by the NCLT was a crucial step in the demerger process. The court’s order mandates that the company convene meetings with its secured and unsecured creditors and equity shareholders within the next three months. The move follows the earlier approval of 75 per cent of secured creditors for the demerger. A two-member NCLT bench, comprising Technical Member Madhu Sinha and Judicial Member Reeta Kohli, issued the order on November 21, 2024, signalling the start of the next phase in Vedanta’s corporate restructuring.

Strengthening Asset Base to Drive Growth
Anil Agarwal, Chairman of Vedanta, has previously highlighted the long-term vision behind the demerger, noting that it will help the company transition from being an asset manager to becoming an asset owner. The move is aimed at consolidating and strengthening Vedanta’s diverse asset base to drive growth and increase the company's competitiveness in the global market. The company is investing $1.9 billion in growth capital expenditure across its business units for fiscal year 2024 and beyond, with a clear focus on expanding operations and enhancing value creation in key sectors.

Vedanta’s Financial Performance
Vedanta has recently posted a strong financial performance. For the September quarter, the company reported a consolidated net profit of Rs 4,352 crore, a significant turnaround from a consolidated net loss of Rs 1,783 crore in the same period last year. The proposed demerger is expected to streamline operations, simplify governance, and provide more transparency and focus for its business units, which could help Vedanta unlock further growth and attract global investors. The NCLT’s clearance is a key milestone in Vedanta’s ambitious demerger plan. By creating independent entities within its diversified portfolio, Vedanta aims to position itself for better alignment with market needs and enhanced growth prospects.