Mining major Vedanta’s proposal to demerge into five independent, sector-focused companies has been approved by its shareholders and creditors. According to the company’s stock exchange filing, the demerger was approved by 99.9987% of shareholders, 99.59% of secured creditors, and 99.9588% of unsecured creditors who voted in favour of the proposal.
The demerger required an in-favour vote from 75% of the shareholders by value, and 75% of the creditors by debt value in order to be approved. The restructuring will split Vedanta into five sector-focused entities. The four new companies—Vedanta Aluminium, Vedanta Oil and Gas, Vedanta Power, and Vedanta Iron and Steel—will eventually be listed on stock exchanges.
Under the demerger scheme, existing shareholders of Vedanta will get one share each in the newly formed companies.
“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,” Vedanta said.
The company had held separate meetings with shareholders, secured creditors and unsecured creditors on February 18 to seek approval for the proposed demerger.
Among the new companies to be formed, Vedanta Aluminium will deal in aluminium production, Vedanta Oil & Gas, will handle crude oil production, Vedanta Power will be involved in power generation and Vedanta Iron and Steel will house the group’s ferrous portfolio.
Vedanta Limited will house zinc and silver producer — Hindustan Zinc and will also as act an incubator for new businesses including Vedanta’s technology verticals, the company said. Vedanta’s parent, Vedanta Resources Ltd., will continue to be the holding company.
The demerger is expected to 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. It will also help reduce debt, and enable focused and sharper capital market access (debt and equity). As of December 31, 2024, Vedanta Limited’s gross debt amounted to Rs 78,496 crore.
The demerger scheme, which was approved by the Vedanta board back in September 2023, mentioned 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 organization 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 which best suit their investment strategies and risk profiles, the company said.