Vedanta Tweaks Demerger Scheme, To Retain Base Metals Unit With Self

Vedanta Ltd. said on Friday that it would not demerge its base metals subsidiary from itself, while the other four wholly-owned arms will take part in the demerger scheme that it had announced earlier.

The board of directors approved the decision to not implement Part V of the scheme pertaining to base metals undertaking, according to an exchange filing. Originally, Vedanta had proposed to demerge its aluminium, power, energy, base metals, and iron and steel units from itself.

However, the mining company's management has now decided to only demerge wholly owned subsidiaries Vedanta Aluminium Metal Ltd., Talwandi Sabo Power Ltd., Malco Energy Ltd., and Vedanta Iron and Steel Ltd.

Parent company Vedanta will retain Vedanta Base Metals Ltd. The decision is the result of the management's discussions and deliberations about the scheme with various stakeholders, including lenders.

They felt that a demerger of the company's base metals unit may be considered at a stage when that business had evolved and matured, to such extent that shareholders realise the full potential value of such a demerger.

The lenders believe that the scheme would be more favourable for unlocking value and overall optimal balancing of debt allocation across residual Vedanta and resulting companies if the base metals undertaking is retained in residual Vedanta itself.

According to the company, the non-implementation of demerger of the base metals undertaking, and retaining the same in Vedanta will not affect the overall value creation as envisioned.

It believes that shareholders will continue to enjoy value unlocking of the base metals business as part of Vedanta where they will remain shareholders.

Additionally, they will be receiving equivalent shares in other resulting companies, which will mirror their existing shareholding in Vedanta. According to the company, as a result, the shareholders’ beneficial interests in the overall value of Vedanta and resulting companies will remain unaffected.

Shares of Vedanta closed 2.99% lower at Rs 477.50 apiece on the BSE, compared to a 1.49% decline in the benchmark Sensex.