Vedanta Shares Decline After Govt and SEBI Raise Demerger Concerns

Shares of Vedanta Ltd. slipped more than 2% on Wednesday, August 20, after the National Company Law Tribunal (NCLT) postponed the hearing on its proposed demerger. The delay comes as the Central Government raised serious objections, alleging concealment of critical details and inflated revenues in the demerger scheme.

Government’s Objections

During the NCLT proceedings, the government claimed that the restructuring plan may impact its ability to recover dues from the company. Officials also alleged that Vedanta altered its demerger scheme after receiving a No Objection Certificate (NOC) from SEBI and stock exchanges, raising questions of transparency.

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SEBI’s Warning

The Securities and Exchange Board of India (SEBI) confirmed that Vedanta had indeed modified the scheme post-clearance, calling it a “serious breach” of regulatory rules. SEBI has issued an administrative warning, stating that such changes should have been presented to the company’s board.

Market & Business Impact

As of today, Vedanta’s stock is down 2.29% intraday and about 1% lower on a year-to-date basis. Market participants believe that regulatory uncertainty may continue to weigh on investor sentiment.

Vedanta had originally announced its demerger in September 2023 to split into four listed entities focusing on aluminium, oil & gas, power, and base metals. While the company maintains that this move will enhance efficiency and unlock shareholder value, the process has been delayed multiple times, with the latest NCLT hearing rescheduled to September 17.

Separately, Vedanta has scheduled a board meeting on August 21 to approve a second interim dividend for FY 2025-26, with August 27 set as the record date.

Key Insights:

• Govt alleges inflated revenues & hidden liabilities.

• SEBI calls Vedanta’s modifications a “serious breach.”

• NCLT hearing deferred to September 17.

• Shares fell 2.29% amid regulatory uncertainty.

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