Vedanta's demerger gets the go-ahead from India's leading stock exchanges

On July 31, 2024, Vedanta Ltd. announced it had received clearance from the leading stock exchanges, BSE and NSE, for its proposed demerger. The approval marks a crucial step in Vedanta's plan to split into six independent listed companies, including aluminium, oil, and gas.

According to a regulatory filing by Vedanta, BSE and NSE issued letters on July 31, 2024, and July 30, 2024, stating they have "no objections/no adverse observations" regarding the proposed scheme. Following these clearances, the company is set to apply with the National Company Law Tribunal (NCLT).

"The scheme remains subject to receipt of other applicable statutory and regulatory approvals, including inter alia from the National Company Law Tribunal and the respective shareholders and creditors, under applicable laws," Vedanta noted in its filing.

This announcement follows Vedanta Ltd's statement on July 30, 2024, confirming it had obtained approvals from a majority of its creditors for the proposed demerger. Specifically, 75 per cent of its secured creditors have given the green light, facilitating the next steps in obtaining exchange clearances and filing the demerger scheme with the NCLT.

The demerger will result in the creation of six independent companies, each focusing on specific sectors: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Ltd, which will continue to oversee existing zinc and new incubated businesses.

The company stated, "Vedanta's demerger will create sector-focused entities aligned with India's global leadership goals in critical minerals, energy security, renewables, and technology sectors."

The move aims to simplify Vedanta's corporate structure by establishing independent businesses. It will offer global investors direct investment opportunities in pure-play companies tied to India's robust growth.

With the demerger, Vedanta is poised to create distinct entities to drive sector-specific growth, enhancing operational efficiencies and strategic focus across its diversified business portfolio.