Vedanta gets approval from 75% secured creditors for demerger

Mining giant Vedanta has received a go ahead from 75% of its secured creditors for obtaining clearance from stock exchanges and subsequently filing its demerger scheme with the National Company Law Tribunal (NCLT) for its proposed demerger.

The Anil Agarwal-led mining major last year announced its plan to demerge its business units into six independent “pure play” companies to "unlock value" and attract investment. The six separate listed companies will be Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Ltd.

The de-merger is planned to be a simple vertical split, for every 1 share of Vedanta, the shareholders will additionally receive 1 share of each of the 5 newly listed companies.

“As an organisation dedicated to supporting the dream of an Atmanirbhar Bharat in natural resources, Vedanta’s demerger will create sector focused entities, aligned with India’s global leadership goals in critical minerals, energy security as well as renewables and technology sectors,” the company says in a statement.

The demerger will help in simplifying Vedanta’s corporate structure by creating independent businesses and will offer global investors direct investment opportunities in pure-play companies linked to India's impressive growth, the statement says.

"Demerger of our businesses will lead to the creation of 6 strong companies, each a Vedanta in its own right. This will unlock massive value. Each demerged entity will chart their own course but will follow Vedanta’s core values, its enterprising spirit and global leadership,” Anil Agarwal, chairman, Vedanta, said earlier in July.

As on 30 June’24, Vedanta's total shareholder return over 5-years stood at 276%, while the 5-years average accumulated dividend yield at 65%, delivering significant value for shareholders.

Vedanta says it has invested $35 billion in India and is making rapid expansion efforts through 50 strategic growth projects. Vedanta is the sole producer of zinc and silver in India – and amongst the largest in the world. It is India’s largest producer of aluminium and largest private sector producer of oil, along with being one of India's largest generators of power and purchasers of renewable energy. Also the sole producer of Nickel in India, Vedanta houses various key metals and minerals in its portfolio including chromium, copper and a traditional ferrous vertical including iron ore and steel.

Once demerged, each independent entity will have "greater freedom" to grow to its potential and true value via independent management, capital allocation, and niche strategies for growth, the company said.

In June, Vedanta received approval from one of its major lenders, State Bank of India (SBI), to go ahead with its demerger plans.