Vedanta starts demerger process with incorporation of base metal subsidiary

Vedanta Ltd on Wednesday announced that it has incorporated its wholly-owned base metal subsidiary Vedanta Base Metals Ltd. The incorporation has been done to implement the demerger scheme of the company, notified last month.

In a regulatory filing, Vedanta Ltd said, “Pursuant to the provisions of Regulation 30 of SEBI Listing Regulations, we wish to inform you that a wholly owned subsidiary of the Company, in the name of ‘VEDANTA BASE METALS LIMITED’ has been incorporated on October 09, 2023.”

Last month, Vedanta announced its board had approved a pure-play, asset-owner business model that would ultimately result in six separate listed firms. The restructuring is expected to be completed in 12-15 months.

Its parent, Vedanta Resources, saw a slate of rating downgrades triggered by worries over its $6.4 billion outstanding debt.

The proposed plan entails five new listed firms — Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, and Vedanta Base Metals — in addition to Vedanta Ltd. “We believe the demerger will unlock value and potential for faster growth in each vertical,” said Anil Agarwal, founder and chairman of Vedanta Resources.

Vedanta Resources has been struggling to raise funds due to rating downgrades and concerns about meeting its debt obligations. Earlier, the company sought to reduce the group’s debt by getting Hindustan Zinc to buy some of the parent group’s zinc assets in a $2.98 billion deal. Hindustan Zinc is a unit of Vedanta Ltd.

However, the plan was opposed by the Central government, which owns a nearly 30 per cent stake in Hindustan Zinc.

Vedanta has total pending payments of around $4 billion until FY25. However, Agarwal said Vedanta Resources will honour all the payments due in 2024. He added that Vedanta has lined up finances of about $1 billion in January and $500-$600 million due in August and is also talking to bondholders.

On Wednesday, 12:30 pm, the shares of Vedanta Ltd were trading 2.63 per cent in the green at Rs 228 apiece at BSE.