Vedanta's Five-Way Demerger: New Companies Set for Stock Exchange Debut by May-June 2024
In a significant corporate development, the five independent companies emerging from the Vedanta Ltd demerger are poised to make their stock exchange debut as early as May 2024, with a definitive timeline set before the end of June. This announcement came directly from company executives during Vedanta's quarterly earnings call on Thursday, marking a crucial step in the conglomerate's restructuring journey.
Demerger Timeline and Debt Distribution Strategy
The demerger process, which received formal approval from the National Company Law Tribunal in December 2023 after more than two years of planning, will officially take effect on 1 April 2024. The five resulting entities—Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Iron and Steel, and the restructured Vedanta Ltd—will each become independently listed businesses.
According to management statements, the parent company's substantial $6.7 billion (approximately ₹60,624 crore) net debt will be apportioned among the new companies based on a carefully calculated formula. This allocation considers both the value of assets each entity will carry post-demerger and their respective cash generation and debt-serving capabilities, as approved by Vedanta's lenders.
"Broadly, net debt in Vedanta... will get apportioned in the ratio of assets that each entity will carry post-de-merger and each entity's cash generation and debt-serving ability," explained Ajay Goel, President and Chief Financial Officer, during the earnings call.
Debt Allocation Details Across New Entities
The debt distribution reveals a strategic approach to financial structuring:
- Vedanta Aluminium will shoulder the lion's share of the debt burden, reflecting its substantial asset base and cash flow potential.
- Vedanta Power will also assume a portion of the debt, though smaller than the aluminium division.
- The remaining debt will remain with Vedanta Limited, which will house the zinc and silver businesses through subsidiary Hindustan Zinc while serving as an incubator for new technology and business opportunities.
- Notably, Vedanta Oil and Gas will operate completely debt-free, as will Vedanta Iron and Steel, which will manage the group's iron ore mines and steel plant under ESL Ltd.
This selective debt allocation has drawn positive reactions from market analysts. "These are slow-growth businesses of the Vedanta Group and their balance sheets would not have been able to absorb high debt. It is better to keep them debt-free and run their operations. So, I would say this is positive as all businesses demerge with healthy balance sheets," commented Amit Lahoti, Lead Analyst for Metals and Mining at Emkay Institutional Equities.
Record-Breaking Quarterly Performance
The demerger announcement coincided with Vedanta's exceptional financial results for the December quarter. The company reported its best-ever quarterly profit of ₹7,807 crore, representing a remarkable 60% year-on-year increase. Revenue also reached a record high of ₹45,899 crore, nearly 20% above the previous year's figures.
Earnings before interest, tax, depreciation and amortization (EBITDA) soared to a historic ₹15,171 crore, marking a substantial 33% improvement from the corresponding period last year. "Q3 FY26 has been a landmark quarter for Vedanta, delivering our highest-ever Ebitda of ₹15,171 crore, with two of our businesses achieving their best-ever financial results," stated Executive Director Arun Misra.
Business Segment Highlights
The aluminium division demonstrated particularly strong performance, achieving its strongest EBITDA margin of $1,268 per ton, supported by record production levels of both alumina and aluminium. Meanwhile, the zinc and silver business under Hindustan Zinc recorded its highest-ever quarterly EBITDA of ₹6,064 crore, with the ongoing silver rally contributing significantly—accounting for 44% of the total profit.
"Alongside the landmark approval for the demerger into five pure-play entities, these results demonstrate our strong operational momentum and readiness to unlock long-term value as we advance Vedanta's 2.0 journey," Misra added, highlighting the strategic alignment between financial performance and corporate restructuring.
The demerger represents a transformative moment for the Anil Agarwal-led conglomerate, creating five focused entities that investors can evaluate independently based on their specific industry dynamics and growth prospects. With debt strategically allocated according to each business's capacity and record financial results providing a strong foundation, Vedanta's demerged entities appear positioned for their market debut with optimized balance sheets and clear operational mandates.
