Vedanta Gets Creditor Nod for Demerger

31 Jul 2024 , 09:34 AM

Mining conglomerate Vedanta has secured approval from 75% of its secured creditors for its proposed business demerger, marking a significant step in its plan to split into six independent listed entities. The company will now seek clearance from stock exchanges and file its demerger plan with the National Company Law Tribunal (NCLT). Additionally, shareholder approval will be required.

The demerger will result in the creation of independent companies focused on aluminium, oil & gas, power, steel and ferrous materials, and base metals. Meanwhile, Vedanta Limited will retain its zinc and newly incubated businesses. Post-demerger, shareholders will receive shares in the five new listed companies.

Vedanta’s lenders include major state-owned banks such as State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Overseas Bank, Union Bank of India, and Bank of Maharashtra, as well as private sector banks like Yes Bank, ICICI Bank, Axis Bank, IDFC First Bank, and Kotak Mahindra Bank.

This creditor approval comes as Vedanta makes strides in reducing its debt. Recently, the company raised ₹8,500 Crore through a Qualified Institutional Placement (QIP), with the funds intended to repay part or all of its debt to Oaktree Capital, Deutsche Bank, and Union Bank of India. By March 31, Vedanta’s net debt had decreased by ₹6,155 Crore from December 2023, totaling ₹56,388 Crore, largely due to strong operational cash flows and working capital releases.