Vedanta looks to go for four-way business split

Mumbai: Metals maven Anil Agarwal-owned Vedanta is considering trimming its proposed demerger into four units, from the originally planned six and later reduced to five, after a corporate tribunal blocked the spin-off of its power business, Talwandi Sabo Power (TSPL), people familiar with the matter told ET.

Last month, the National Company Law Tribunal (NCLT) had dismissed the proposed separation of TSPL, citing objections from Chinese firm SEPCO, which holds ₹1,251 crore of debt in the operating entity.

The Chinese company owns more than 75% of the unsecured liabilities of the company, and effectively has a veto on its future capital structure.


"The company had received creditor approval to demerge into five entities, but is now looking to proceed with four and retain Talwandi within Vedanta," a person aware of the discussions said.

Vedanta's original scheme, unveiled in September 2023, proposed breaking up the conglomerate into six separate entities representing the different revenue streams: Vedanta, Vedanta Aluminium Metal (VAML), Talwandi Sabo Power (TSPL), Malco Energy (MEL), Vedanta Base Metals (VBML), and Vedanta Iron and Steel (VISL). However, following lender feedback and uncertainty in the base metals business, the company revised its plan in December 2024 to retain VBML.

"Lenders believe the scheme would better unlock value and optimise debt allocation if the base metals business remains within the residual Vedanta," the company had said in its exchange filing at the time.

Bid to Unlock Shareholder Value
Now, following the NCLT's March 4 ruling against the TSPL demerger, the company is likely to move forward with a four-entity split, while pursuing a separate appeal for TSPL at the National Company Law Appellate Tribunal, Delhi.

"This does not impact or alter the progress of the other business undertakings proposed to be demerged," a Vedanta spokesperson said. "TSPL has filed an appeal, and the second motion petition for the rest of the scheme has already been filed with the NCLT."

The demerger is part of Vedanta's strategy to simplify its corporate structure and unlock shareholder value. Controlled by Anil Agarwal's Vedanta Resources Ltd., the group is also seeking to reduce debt and boost investor confidence.

Creditors approved the revised five-entity demerger plan recently. In January, Fitch Ratings upgraded Vedanta Resources, the parent company, to B+, citing improved liquidity.