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Vedanta Gains Green Light from 75% of Creditors for Demerger Plan

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Synopsis:

Vedanta's demerger has been approved by 75% of secured creditors. The demerger will create six independent companies, enhancing sector focus and investment opportunities. The company aims to simplify its structure, unlocking value for shareholders.

Vedanta News Today

Vedanta, a leading mining major, has received approval from 75% of its secured creditors for the clearance of its demerger scheme by stock exchanges, subsequently filing with the National Company Law Tribunal (NCLT).

Purpose and Vision

The demerger aims to create sector-focused entities aligned with leadership goals in critical minerals, energy security, renewables, and technology. This move is expected to simplify Vedanta’s corporate structure by forming independent businesses, offering global investors direct investment opportunities in companies linked to India's growth.

Structure and Impact

Vedanta Chairman Anil Agarwal, at the company's annual general meeting (AGM), emphasised that the demerger would lead to the creation of six companies, each operating independently yet following Vedanta’s core values and enterprising spirit. These companies will be:

  • Vedanta Aluminium

  • Vedanta Oil and Gas

  • Vedanta Power

  • Vedanta Steel and Ferrous Materials

  • Vedanta Base Metals

  • Vedanta Ltd.

For every share of Vedanta Limited, shareholders will receive an additional share in each of the five newly listed companies, facilitating a straightforward vertical split.

Shareholder Value and Performance

Vedanta boasts a strong track record of delivering returns to shareholders. As of June 2024, the company’s total shareholder return over five years stood at 276%, with an average accumulated dividend yield of 65%. These metrics underscore Vedanta’s commitment to creating significant value for its shareholders.

Investment and Expansion

Vedanta is the Indian subcontinent’s only diversified natural resources company, having invested over $35 billion in India. The company is making rapid expansion efforts through 50 strategic growth projects.

Vedanta is India’s sole producer of zinc and silver and one of the largest globally. It is also India's largest producer of aluminium, the largest private sector oil producer, and one of the country’s biggest power generators and purchasers of renewable energy.

Market Performance

On Tuesday, Vedanta’s share price closed 0.35% lower at Rs 447.4 on the NSE. Over the past year, Vedanta shares have delivered a return of 62.10% to investors, reflecting its strong market performance.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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