The National Company Law Tribunal (NCLT) Mumbai bench has issued significant directions regarding Talwandi Sabo Power Limited's (TSPL) scheme of arrangement application, marking a crucial step in Vedanta Limited 's ambitious demerger plan.

Key Developments

• Shareholder Meeting Dispensed: The NCLT has dispensed with the meeting of TSPL's equity shareholders, as the company received consent from all seven equity shareholders through affidavits.

• Creditor Meetings Mandated: The tribunal has directed TSPL to convene meetings of its secured and unsecured creditors within 90 days.

Creditor Details

Demerger Scheme Highlights

• Share Allocation: Under the scheme, shareholders will receive 1 fully paid-up equity share of TSPL (face value INR 10) for every 1 equity share of Vedanta Limited (face value INR 1).

• Business Separation: The demerger aims to separate Vedanta's businesses into independent entities, with TSPL set to receive the Merchant Power Undertaking.

• Strategic Objectives: The scheme is designed to create focused companies in aluminium, power, oil & gas, and iron ore businesses, potentially unlocking value and attracting diverse investor sets.

Implications and Outlook

This NCLT directive represents a significant milestone in Vedanta's corporate restructuring efforts. By allowing the dispensation of the equity shareholder meeting for TSPL, the process is streamlined, potentially accelerating the demerger timeline. However, the mandated creditor meetings underscore the importance of addressing the interests of all stakeholders in this complex corporate action.

The demerger strategy aligns with the global trend of conglomerates streamlining their operations to enhance focus and unlock shareholder value. For Vedanta, this move could lead to more specialized management of each business segment and potentially attract targeted investments in the separated entities.

As the process unfolds, market participants will be keenly watching how this restructuring impacts Vedanta's overall valuation and the individual performance of the soon-to-be-separated entities. The success of this demerger could set a precedent for other diversified conglomerates in India considering similar strategic realignments.

Vedanta Resources Finance II Plc, a subsidiary of Vedanta Resources Limited (VRL), has issued $500 million in 9.125% guaranteed senior bonds due 2032. This bond issuance, completed on October 15, 2025, involves potential encumbrances on a significant portion of Vedanta Limited's equity shares held by promoter group entities.

Key Details of the Bond Issuance

Potential Share Encumbrances

The bond terms involve potential encumbrances on 2,095,867,334 equity shares of Vedanta Limited, representing 53.60% of the company's total shares. These shares are held by promoter group entities, including:

• Twin Star Holdings Limited
• Welter Trading Limited
• Vedanta Holdings Mauritius II Limited

Bond Terms and Conditions

Restrictions on Promoter Group

The promoter group entities are not permitted to create or allow any encumbrances or security interests over their directly held assets unless certain conditions are met.

Share Acquisition and Disposal

Twin Star, Welter, and Vedanta Holdings Mauritius II are restricted in how they can acquire or dispose of Vedanta Limited shares.

Default Scenario

Following an Event of Default, the promoter group entities can only dispose of their assets as specified in the bond terms.

Important Notes

• Citicorp International Limited acts as the trustee for the bondholders.
• No actual pledge has been created over the equity shares as of the disclosure date.
• The obligations will take effect upon execution of a supplemental trust deed, which is to be completed by October 31, 2025.

Implications

This bond issuance and the associated terms could have significant implications for Vedanta Limited's ownership structure and the flexibility of its promoter group. The potential encumbrance of over half of Vedanta Limited's shares suggests a complex financial arrangement that may impact the company's future strategic decisions.

Investors and market watchers should closely monitor how these bond terms might affect Vedanta Limited's operations and corporate governance in the coming years. The restrictions on share transactions and potential encumbrances could influence the company's ability to raise capital or undergo structural changes in the future.

As this is a developing situation, stakeholders should stay informed about any further disclosures or changes to the terms of this bond issuance.