NCLT defers hearing on Vedanta demerger after govt flags irregularities

Business Standard

14 hours ago

The government has raised serious objections to the proposed restructuring plan ofVedanta Ltd, alleging concealment and non-disclosure of material information in its demerger scheme, according to a report by CNBC-TV18 on Wednesday. The matter was heard at the National Company Law Tribunal (NCLT), where officials highlighted concerns over inflated revenues and hidden liabilities.
Government representatives argued that Vedanta modified key aspects of its demerger scheme after obtaining a No Objection Certificate (NOC) from the Securities and Exchange Board of India (Sebi) and stock exchanges. Sebi confirmed that alterations were made post-clearance, calling the move a 'serious breach' of its master circular. The regulator said it had issued an administrative warning to the company and underlined that such modifications should have been placed before Vedanta's board for formal approval.
Taking note of these objections, the NCLT deferred the matter to September 17 for further hearing.
Background to the Vedanta demerger
Anil Agarwal-led Vedanta announced its demerger plan in September 2023, proposing a split into four independently listed entities focusing on aluminium, oil and gas, power, and base metals. The company explained that the restructuring would sharpen operational focus, improve efficiencies, and unlock shareholder value.
The original completion deadline of March 2025 has already been extended to September 30, 2025, as the company awaits regulatory approvals, including the NCLT's clearance.
The plan secured near-unanimous support from stakeholders. In February, it was approved by 99.99 per cent of shareholders, 99.59 per cent of secured creditors, and 99.95 per cent of unsecured creditors.
Under the plan, investors will receive one additional share in each of the newly created companies.
Corporate demergers
Vedanta is not the only company to announce corporate demergers to increase operational efficiency. Recently, Apollo Hospitals Enterprises announced the spin-off of its omni-channel pharmacy and digital health businesses, while Tata Motors has separated its passenger vehicle arm, including Jaguar Land Rover, with a listing expected later this year.
For Vedanta, the demerger would create Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Iron and Steel, and other distinct entities.
Vedanta plans second dividend for FY26
Meanwhile, Vedanta has scheduled a board meeting on Thursday, August 21, to consider a second interim dividend for the financial year that ends on March 31, 2026 (FY26). The record date has been fixed as August 27.
The mining and resources conglomerate reported an 11.7 per cent year-on-year decline in consolidated net profit for the June quarter (Q1 FY26) at ₹3,185 crore, compared with ₹3,606 crore in the year-ago period. On a sequential basis, profit also fell 8.5 per cent from ₹3,483 crore in Q4 FY25.
Despite profit pressures, Vedanta posted its highest-ever first-quarter operating profit (Ebitda) at ₹10,746 crore, a 5 per cent annual increase.
Vedanta shares fell 2 per cent to ₹440 on the BSE as of 1:30 pm, after the NCLT deferred hearing on the company's demerger following government objections over irregularities. Year-to-date, the stock is down about 1 per cent.