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Informist, Tuesday, Dec. 17, 2024

 

By Rajesh Gajra

 

NEW DELHI – Vedanta Ltd. will "soon" convene meetings of its shareholders, secured creditors, and unsecured creditors, to seek their approval for the scheme of demerger of a few verticals into five separate companies, a senior official of the company told Informist on the sidelines of an energy conference in Delhi Tuesday. On Nov. 21, the Mumbai bench of the National Company Law Tribunal had ordered the company to hold these meetings after giving a 30-day notice.

 

The NCLT set a 90-day deadline to hold the meeting of shareholders and creditors. Vedanta will also have to provide a remote e-voting facility to the shareholders and creditors, NCLT said in its order.

 

The company official said the process of the demerger "is on track". The company had said earlier that it expected the process of demerger to conclude by the end of 2024-25 (Apr-Mar). The demerger plan proposes to result in the demerged Vedanta Ltd. which will hold the operations under its subsidiary Hindustan Zinc Ltd., and also new businesses being incubated such as semiconductor and display. Five other separate companies will result from the demerger scheme -- Vedanta Aluminium Metal Ltd., Talwandi Sabo Power Ltd., Malco Energy Ltd., Vedanta Base Metals Ltd., and Vedanta Iron and Steel Ltd.

 

The company had indicated earlier that under the proposed demerger scheme, existing shareholders would receive one share each of the five resulting companies for every one share held by them. Vedanta Ltd. and the five resulting companies will be listed on stock exchanges, according to the demerger scheme.

 

As per the NCLT order, Vedanta Ltd. and the five resulting companies will need the approval of creditors. As the demerged company, Vedanta Ltd. will seek the approval of 4,180 creditors to whom it owes INR 731.67 billion, of which 38 secured creditors make up for INR 527 billion and the remaining 4,142 unsecured creditors make up for the balance INR 204.68 billion.

 

Vedanta's board had approved the demerger scheme on Sep 29, 2023, and stock exchanges had issued a 'no adverse observations' letter to the company on the proposed scheme on Jul 31. The company filed an application with the NCLT after receiving a nod for the filing from over 75% of creditors in July.

 

NCLT also directed the resulting companies to take approval of their respective creditors. In its application with the NCLT, Vedanta made all resulting companies except Talwandi Sabo Power as applicants. The NCLT order noted that Talwandi Sabo Power had dues of INR 12.51 billion to an engineering, procurement, and construction contractor.

 

The power producer filed an objection with the NCLT against it not being an applicant in the demerger scheme, but the NCLT ruled out its inclusion on the grounds that the interests of the company would not be affected since its shareholders and creditors could still "take a call either way responding to the proposed arrangement".

 

Malco Energy Ltd, in which Vedanta's oil and gas operations will be housed, will need the approval of two creditors to whom it owes INR 1.01 billion and also of 243 creditors to whom it owes INR 7.58 billion. The other resulting companies have negligible or no obligations to creditors.

 

On Tuesday, shares of Vedanta ended 2% lower at INR 503.20 on the National Stock Exchange.  End

 

Edited by Avishek Dutta

 

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