Vedanta Ltd., the Anil Agarwal-led mining conglomerate, witnessed a recovery in its stock on Thursday, May 29, after a significant development in its demerger strategy. The National Company Law Appellate Tribunal (NCLAT) has provided interim relief to the company by staying an earlier order of the National Company Law Tribunal (NCLT) that had rejected the Talwandi Sabo Power Ltd. (TSPL) demerger scheme.

Background of the TSPL Demerger

TSPL, a subsidiary of Vedanta Ltd., had proposed a scheme of arrangement under the broader strategic reorganisation plan of the group. The scheme, however, faced objections and was dismissed by NCLT in March 2025. The primary opposition came from SEPCO Electric Power Construction Corporation, a Chinese-based creditor of TSPL, which raised concerns regarding the plan.

The NCLT, acknowledging these objections, turned down the demerger proposal. This created uncertainty regarding Vedanta’s massive restructuring exercise aimed at unlocking shareholder value. However, the situation took a positive turn after the NCLAT stepped in and issued a stay, granting Vedanta the opportunity to continue its demerger process, at least temporarily.

Strategic Reorganisation Plan Continues

Vedanta, in its stock exchange filing on May 29, reaffirmed its commitment to the reorganisation strategy. The company emphasized that the NCLAT’s stay allows them to progress with their plan, which includes splitting the company into five distinct listed entities.

These entities will focus on the following sectors:

• Aluminium

• Oil & Gas

• Power

• Ferro Alloys

• Base Metals

Once the demerger is complete, shareholders will receive one share in each of the five new companies for every one share they hold in the current listed entity. This move is aimed at improving operational focus, enhancing capital allocation, and unlocking long-term value for stakeholders.

Extension of Demerger Timeline

Due to the regulatory roadblocks and pending approvals, Vedanta has also decided to extend the timeline for completing the demerger process. Initially slated for March 30, 2025, the deadline has now been moved to September 30, 2025. The company cited the need to adhere to statutory compliance and incorporate necessary legal modifications arising from the ongoing litigation and objections.

Market Response: Vedanta Shares Rebound

Following the NCLAT's decision, Vedanta shares rebounded from intraday lows, registering a gain of 1.1% to trade at ₹451.65 on the NSE. Over the past month, the stock has risen 8.5%, indicating positive investor sentiment aligned with the company’s strategic transformation and regulatory progress.

Impact of SEPCO’s Objection

The case's complexity arises from SEPCO Electric Power Construction Corporation’s role as a creditor. As a Chinese engineering company with historical ties to TSPL through past construction contracts, SEPCO raised concerns regarding financial liabilities, payment structures, and the potential impact of the demerger on its ability to recover dues.

While Vedanta contended that the scheme does not adversely affect creditor interests, SEPCO’s opposition was influential enough for the NCLT to initially reject the proposal. The NCLAT stay order, however, now offers Vedanta a window to address the concerns and work on a mutually agreeable solution.

Relevance of Talwandi Sabo in Vedanta’s Portfolio

Talwandi Sabo Power Ltd. operates a 1,980 MW thermal power plant in Punjab. It plays a crucial role in Vedanta’s power business and contributes significantly to the group’s generation capacity. The successful demerger and repositioning of TSPL is essential not only from a structural standpoint but also for optimizing debt management and future investments.

Why the Demerger Matters to Investors

The core idea behind Vedanta's restructuring is to enable each business vertical to operate independently, pursue tailored strategies, and attract sector-specific investors. In recent years, conglomerates have trended toward decentralisation, and Vedanta’s move aligns with this global strategy.

Additionally, the simplified structure will provide clarity to investors, increase transparency, and potentially lead to higher valuations for individual verticals compared to the combined entity.

Legal Process Ahead

Although the NCLAT’s interim order is a positive sign, it is important to note that the case is still under judicial review. A final hearing and verdict will determine whether Vedanta can proceed unchallenged with the TSPL demerger. Until then, regulatory compliance and legal preparedness remain critical.

Vedanta will also need to continue engaging with creditors like SEPCO and regulatory bodies to ensure all objections are adequately resolved. The company has reiterated its commitment to navigating this process responsibly while ensuring stakeholder confidence remains intact.

Looking Ahead: Madhya Pradesh Plant and Broader Vision

In addition to the current restructuring, Vedanta has plans to expand capacity and diversify its operations further. Notably, it is working on commissioning a plant in Madhya Pradesh, which is expected to enhance its presence in the power and metals segment.

With the NCLAT's relief, Vedanta gets a much-needed boost to carry forward its transformational journey, potentially leading to better cash flow management, improved debt restructuring, and long-term returns for investors.

Conclusion

The NCLAT’s interim stay on the NCLT’s dismissal of the TSPL demerger scheme comes as a critical win for Vedanta in its bid to execute a large-scale reorganisation. While challenges remain in the form of regulatory scrutiny and creditor objections, the legal relief now gives Vedanta the breathing space it needs to push forward with its ambitious restructuring. Investor sentiment has turned optimistic, evident in the stock's uptick. With the demerger plan still on track, all eyes will be on the final verdict and subsequent developments as Vedanta aims to unlock long-term shareholder value through business vertical separation.

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