Vedanta demerger receives approval from shareholders, creditors

Vedanta Ltd has received approval from its shareholders and creditors for its proposal to demerge the company into five independent, sector-specific companies, according to a stock exchange filing by the company.

The demerger was approved by 99.99% of shareholders, 99.59% of the secured creditors, and 99.95% of unsecured creditors of Vedanta Limited who voted in favour of the demerger, as per the stock exchange filing made by the company.

Vedanta Limited shares are currently trading in the green, up 0.63% at ₹426.15 apiece on the NSE. The company's market capitalisation stands at ₹1,66,641.19 crore.

According to Vedanta’s demerger scheme, every Vedanta shareholder will receive 1 additional share in each of the 4 newly demerged companies on the completion of the demerger process.

The five companies are Vedanta Aluminium, one of the world’s largest producers of aluminium; Vedanta Oil & Gas, India’s largest private-sector crude oil producer; Vedanta Power, one of India’s largest generators of power; Vedanta Iron and Steel, a company with a highly scalable ferrous portfolio; and Vedanta Limited—which will include the world’s second-largest integrated zinc producer & third largest silver producer—in Hindustan Zinc.

Vedanta Ltd. will also act as an incubator for new businesses, including Vedanta’s technology verticals.

As per Vedanta’s demerger scheme, the demerger will create five independent companies of a global scale focussed on the mining, production, and/or supply of aluminium, iron ore, copper, oil & gas, and on generation and distribution of power.

It will enable greater focus of the Vedanta management on the relevant businesses thereby allowing further streamlining of operations and more efficient usage of assets and leveraging of opportunities.

Similarly, the demerger scheme has emphasised that over time, each of the independent companies can attract different sets of investors, strategic partners, lenders, and other stakeholders enabling deeper collaboration and expansion in these specific companies without committing the existing organisation in its entirety.

The demerger will enable investors to separately hold investments in businesses with different investment characteristics and market potential thereby allowing them to select investments that best suit their investment strategies and risk profiles.

As per Vedanta’s demerger scheme, it will also enable focused and sharper capital market access (debt and equity), thereby unlocking the value of the demerged entities.

Vedanta Limited currently operates a diversified portfolio with interests in metals, mining, oil and gas, power generation, and other emerging sectors.

As listed companies have to seek various approvals under relevant sectoral and capital market regulations, the proposed demerger scheme will remain subject to receipt of other applicable statutory, government and regulatory approvals, including inter alia from the National Company Law Tribunal.