Vedanta edges higher ahead of NCLT's decision on demerger scheme

Vedanta's plea to demerge into four distinct entities is listed for final approval before the NCLT on Wednesday; stock rises 1.1 per cent ahead of the tribunal's decision

Shares of commodities major Vedanta rose 1.1 per cent to end at Rs 466 ahead of a final decision on its demerger scheme by the NCLT (National Company Law Tribunal). The company’s plea is listed for final approval before the tribunal on Wednesday.

 

The Anil Agarwal-led firm is planning to demerge the company into four separate, focused entities with an aim to unlock value and attract a specific pool of investors.

 

The restructuring will result in the formation of Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Iron and Steel, and other existing and new businesses under Vedanta.

 

At the last close, Vedanta was valued at Rs 1.82 trillion. 

 

In February, Vedanta’s demerger proposal was approved by 99.99 per cent of its shareholders. The scheme was also approved by 99.59 per cent of secured creditors and 99.95 per cent of unsecured creditors.

 

As per the scheme, each shareholder will receive one additional share in each of the new demerged entities once the process is complete.

 

According to Vedanta, the demerger will provide a platform for individual units to pursue strategic agendas more freely and better align with customers, investment cycles, and end markets.

 

Shares of Vedanta have rallied 8 per cent over the past one month, outperforming the Nifty, which is up 3.3 per cent.

 

Several companies have resorted to demergers in order to unlock value. The latest example is Apollo Hospitals Enterprises, which announced plans to separately list its omni-channel pharmacy and digital health businesses.

 

Tata Motors has also hived off its passenger vehicle (PV) business, which includes Jaguar Land Rover. The new entity is expected to go public by calendar year-end.