Shares of Vedanta Limited fell over 2% on Tuesday following a series of setbacks related to the company's proposed demerger plan. The decline came as the National Company Law Tribunal (NCLT) postponed hearings on the demerger to September 17, amid objections from the Central Government and a warning from the Securities and Exchange Board of India (SEBI).

Vedanta Refutes Claims of Stopped Demerger

Vedanta has refuted claims suggesting that its demerger process has been stopped. The company made this clarification in response to circulating reports about the status of its corporate restructuring initiative.

Government Raises Concerns

The Central Government has raised objections to Vedanta's demerger plan, citing potential hindrances to the recovery of dues. The government also alleged that the company concealed key information, inflated revenues, and had undisclosed liabilities. These concerns have cast a shadow over the company's restructuring efforts.

SEBI's Administrative Warning

In a separate development, SEBI issued an administrative warning to Vedanta for making modifications to the demerger scheme after receiving a No Objection Certificate. The market regulator termed this action a "serious breach," further complicating the company's demerger process.

Demerger Plan Details

Vedanta had announced its demerger plan in September 2023, proposing to split the company into four separate entities:

1. Aluminium
2. Oil and Gas
3. Power
4. Base Metals

The completion deadline for this restructuring was extended to September 30, 2025, highlighting the complexity of the process.

Upcoming Board Meeting

Despite the ongoing challenges, Vedanta's board is scheduled to meet on August 21 to consider a second interim dividend. The company has set August 27 as the record date for this potential dividend.

Market Reaction

The market responded negatively to these developments, with Vedanta's shares dropping more than 2% in trading. Investors appear to be cautious about the company's future amid the regulatory and governmental scrutiny.

Recent Corporate Disclosure

In a recent corporate filing, Vedanta's subsidiary, Bharat Aluminium Company Limited (BALCO), received a penalty order from the Income Tax Department. The order, dated August 18, levies a penalty of Rs. 80.96 lakh for the Assessment Year 2012-13. BALCO intends to file an appeal against this order, expressing confidence in a favorable outcome.

The series of events surrounding Vedanta's demerger plan and the recent regulatory actions have created uncertainty for investors. As the situation unfolds, market participants will be closely watching for further developments and the company's response to these challenges.

Vedanta Limited is navigating multiple regulatory and legal challenges. The company is currently reviewing a Supreme Court order and evaluating its legal options, while also addressing concerns raised by the Securities and Exchange Board of India (SEBI) regarding its demerger plan.

Supreme Court Order and Demerger Plan

Vedanta's spokesperson has stated that the company is reviewing a recent Supreme Court order and assessing its legal options. The company clarified that reports linking the Supreme Court's judgment to its demerger are misplaced. Vedanta plans to issue a corporate guarantee in favor of the Petroleum Ministry once the demerger scheme becomes effective through National Company Law Tribunal (NCLT) approval.

SEBI Warning on Demerger Plan

SEBI has issued an administrative warning to Vedanta, stating that modifications to its demerger plan are not allowed after the no-objection certificate (NOC) was granted. This comes after the government raised objections to Vedanta's demerger, claiming it would hinder the recovery of dues. Although SEBI and exchanges had previously approved the plan, the government pointed out that Vedanta made changes following this approval.

Impact on Vedanta

These legal and regulatory challenges may have significant implications for Vedanta Limited, one of India's leading diversified natural resources companies. The complications with the demerger plan and the ongoing legal proceedings could affect the company's financial planning and corporate strategy.

Other Corporate Updates

Tax Penalty for Subsidiary

Bharat Aluminium Company Limited (BALCO), a subsidiary of Vedanta, received a penalty order from the Income Tax Department for the Assessment Year 2012-13. The penalty amounts to Rs. 80.96 lakh under Section 271(1)(c) of the Income Tax Act, 1961.

Appeal Plans

BALCO intends to file an appeal with the Appellate Authority and a rectification application against the penalty order. The company is optimistic about a favorable outcome and does not expect the order to have any material financial impact.

Transfer of Shares to IEPF

Vedanta has issued a notice regarding the transfer of equity shares to the Investor Education and Protection Fund (IEPF). This transfer applies to shares with unclaimed dividends for seven consecutive years.

Investor Relations

Vedanta continues to maintain transparency with its shareholders. The company has published newspaper advertisements notifying the transfer of unclaimed shares to the IEPF and providing instructions for shareholders to claim their shares and dividends.

These recent developments highlight the ongoing legal and regulatory challenges faced by Vedanta Limited, as well as its efforts to comply with corporate governance standards and investor protection measures.