Vedanta Demerger: Shareholders & creditors give nod to proposed 5-unit plan—10 things to know

Vedanta Ltd Demerger Plan Explained: Private sector mining giant Vedanta Ltd on Thursday received a much-awaited go-ahead from its shareholders and creditors for its proposal plan to demerge into five sector-specific units, each dedicated to aluminimum (Vedanta Aluminium), crude oil (Vedanta Oil & Gas), power (Vedanta Power), ferrous products (Vedanta Iron and Steel), and silver and zinc (through itself, Vedanta Ltd, and HZL). 

Here are 10 things to know about the proposed Vedanta demerger: 

• The demerger—to craft four new companies, Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, and Vedanta Iron and Steel—was approved by 99.99 per cent of its shareholders, and 99.59 per cent and 99.95 per cent of its secured and unsecured creditors , respectively.

Vedanta Demerger Plan | What’s in it for investors?

• After the completion of the arrangement, every Vedanta Ltd shareholder will receive an additional share in each of the four new companies on the completion of the demerger process.
• Which will be the resultant companies of the plan?
  • Vedanta Aluminium (one of the world’s largest producers of aluminium)
  • Vedanta Oil & Gas (the country’s largest private sector crude oil producer)
  • Vedanta Power (one of the country’s largest power producers)
  • Vedanta Iron and Steel (a ferrous products major)
  • Vedanta Limited (will also act as an incubator for new businesses, including the group’s technology verticals)  
• The plan will enable investors to separately hold investments in businesses having their unique investment characteristics and market potential within the group. They will be able to select investments that best suit their market strategies and risk profiles. 
• 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 organisation in its entirety, according to the filing. 

How will the Vedanta demerger help the group?

• The plan is set to enable the Vedanta management to focus on relevant businesses while streamlining its operations and enhancing its efficiencies, say analysts. 
• The demerger is also set to be instrumental in unlocking value in independent units with a sharper and more focused access (debt and equity) to the country’s captal market.
• Currently, Vedanta Ltd operates a diversified portfolio with interests in spaces including metals, mining, oil and gas and electricity.
• As part of the arrangement, Vedanta Ltd will also house the company’s base metals operations.
• The demerger plan is subject to receipt of other applicable statutory, government and regulatory approvals.

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On Thursday, Vedanta shares ended 2.4 per cent higher at Rs 433.6 apiece on BSE.

With inputs from agencies

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