Vedanta's ambitious demerger plan faces rocky road ahead as government raises objection

Mining giant Vedanta's ambitious demerger plan just encountered a significant challenge with the proposal drawing objection from the Centre, news agency Reuters reported on August 20 quoting CNBC-TV18.

The Central government has expressed “serious objections” to the proposed split, citing concerns over the possible concealment and non-disclosure of crucial information related to the demerger.

Furthermore, the government has raised alarms about the potential inflation of revenues and undisclosed liabilities.


The govt's objection to the mining biggie's proposal to split into multiple separate comes after the company received a warning from the markets regulator regarding issues of non-compliance.

The company, led by billionaire Anil Agarwal, is seeking to boost its financial performance through this extensive overhaul. It will, however, now be a rocky road following govt objection.

The National Company Law Tribunal (NCLT) has now postponed the hearing concerning Vedanta's demerger case until September 17.

With reference to Sebi's warning, Vedanta said it was reviewing the SC judgment in this matter. The case pertains to the petition filed by Talwandi Sabo Power Limited (TSPL),a wholly-owned subsidiary of the Vedanta, challenging the entitlement to Foreign Trade Policy benefits on account of mega power status.

Vedanta later responded to the development. Below here is a statement by a Vedanta spokesperson:

Vedanta has filed a detailed response to the Centre’s representation. The Company has informed the Hon’ble National Company Law Tribunal that the Company will issue a corporate guarantee in favor of the Ministry of Petroleum and Natural Gas (MoPNG) once the Scheme becomes effective. This is in the event Malco Energy Limited (“MEL”) is unable to meet or satisfy potential contractual liability, if any, towards MoPNG arising under the Production Sharing Contracts and Revenue Sharing Contracts (pertaining to the oil and gas blocks).

The proposed demerger is a strategic step to unlock long-term value by creating sector-focused, pure-play businesses with independent management teams.

SEBI has confirmed it has no further comments on the merits of the Scheme, and it had issued an administrative cautionary letter over a procedural lapse. This letter carries no financial or operational restrictions, and the matter has already been disclosed by the Company. The Company has received NOCs from stock exchanges on the modified Scheme.

Further, certain reports linking the Hon’ble Supreme Court’s August 19, 2025 judgment to the demerger are misplaced. The judgment pertains to a legacy contractual matter concerning Talwandi Sabo Power Ltd.’s appeal regarding customs duty benefits under the Mega Power Policy, and has no bearing on the demerger process. Vedanta is reviewing the order and evaluating legal options.

Vedanta remains committed to driving sustainable growth while safeguarding the interests of its investors, partners, regulators, and the country at large.

Vedanta demerger: A history of back and forth

On July 2, the Ministry of Petroleum and Natural Gas raised objections to Vedanta's proposed demerger during a session at the NCLT Mumbai bench.

SEBI informed the tribunal that it has no further comments regarding the demerger scheme and is currently verifying Vedanta's adherence to relevant regulatory standards.

Additionally, legal counsel from the National Stock Exchange (NSE) confirmed that a no-objection certificate for the demerger has been granted. However, a representative from the Ministry of Petroleum and Natural Gas requested extra time to present the ministry's views on the scheme at the upcoming hearing.

Vedanta had announced its demerger plan in September 2023, aiming to establish four independent publicly listed companies specialising in aluminium, oil and gas, power and base metals, with the goal of enhancing operational efficiency, improving management focus and increasing shareholder value.

The deadline for finalising the demerger was extended from March 2025 to September 30, 2025, due to pending approvals from the NCLT and other governmental agencies.