Vedanta Shares in Focus: Announced Revision to Demerger Plan

On December 20, 2024, Vedanta Ltd announced changes to its previously proposed demerger scheme, with a significant revision to retain its base metals operations within the parent company. This decision came after extensive discussions with stakeholders, including lenders.

Original Demerger Proposal

Initially, Vedanta had proposed the demerger of five major undertakings into separate entities, aiming to unlock greater value. These undertakings were:

• Vedanta Aluminium Metal Ltd (VAML)
• Talwandi Sabo Power Limited (TSPL)
• Malco Energy Ltd (MEL)
• Vedanta Base Metals Ltd (VBML)
• Vedanta Iron and Steel Ltd (VISL)

The goal was to enhance operational efficiency and maximize shareholder value.

Revised Decision on Base Metals Business

Based on feedback from lenders and the current status of its base metals business, Vedanta decided not to proceed with the demerger of Vedanta Base Metals Ltd (VBML) at this time. The company clarified that this change will not impact the overall value creation for shareholders.

Vedanta emphasised that stakeholders would still benefit from value unlocking within the Base Metals business as part of the residual Vedanta entity. Furthermore, shareholders will continue to receive equivalent shares in the companies resulting from the other parts of the demerger.

Vedanta also shared that it is exploring alternative methods to restart its copper operations in Thoothukudi, Tamil Nadu. These operations are critical to the base metals unit, and the company is working on strategies to resume production.

The revisions made to the demerger scheme do not affect the other parts of the proposal, which include the demerger of the Aluminium, Merchant Power, Oil and Gas, and Iron Ore undertakings. The terms of the demerger, including the share entitlement ratio, remain as initially outlined.

Timeline and Next Steps

The demerger plan, first proposed in July 2024 and reaffirmed in November 2024, aims to optimise value and improve debt allocation across the resulting entities. Vedanta is working with stakeholders to arrange the necessary meetings as required by the National Company Law Tribunal (NCLT).

On December 23, 2024, Vedanta share price opened at ₹480.80 and touched the day high of ₹484.70 at 10:05 AM.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.