Indian mining company Vedanta Limited has announced that it has received approval from 75 per cent of its secured creditors to proceed with its demerger scheme.
This clearance allows Vedanta to seek approval from stock exchanges and subsequently file the demerger scheme with the National Company Law Tribunal (NCLT).
Company's demerger
The company's demerger aims to create sector-focused entities aligned with India's global leadership ambitions in critical minerals, energy security, renewables, and technology sectors, as per its filing.
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The company further added in the filing that the demerger will simplify Vedanta's corporate structure by establishing independent businesses. In addition, the move will also offer global investors direct investment opportunities in specialised companies.
Earlier this month, at Vedanta's Annual General Meeting, Anil Agarwal, Chairman of Vedanta Ltd., stated, "The demerger of our businesses will lead to the creation of six strong companies, each a Vedanta in its own right. This will unlock massive value. Each demerged entity will chart its own course but will follow Vedanta's core values, its enterprising spirit, and global leadership." After the demerger, Vedanta's existing businesses will be structured into six independent companies. These companies are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited.
The proposed demerger is seen as a strategic move to enhance Vedanta's operational efficiencies and provide greater clarity to investors by allowing them to invest directly in distinct segments of the business, the company said.
Simple vertical split
The demerger is planned to be a simple vertical split, for every 1 share of Vedanta Limited, the shareholders will additionally receive 1 share of each of the 5 newly listed companies.
At the opening of the day's trade, the stocks of the company touched the level of 453, up 0.45 per cent. The stock of the company has performed well over the last year. The shares have risen 191.15 points or around 74 per cent.
Vedanta has a track record of giving strong returns to its shareholders. As of 30 June'24, Vedanta's total shareholder return over 5 years stood at 276 per cent, while the 5-year average accumulated dividend yield at 65 per cent, delivering significant value for shareholders.
