Vedanta announced on Friday that its demerger plan is on track and in its final stages. The mining conglomerate further said in an exchange filing that it has meetings planned in the upcoming months with its shareholder and creditors to ensure timely conclusion of the move.Vedanta Ltd on Friday reported a profit of Rs 5,603 crore for the quarter ended September 2024 as against as loss of Rs 915 crore in the same quarter of last year. Revenue from operations, meanwhile, declined 4% year-on-year to Rs 37,171 crore in the quarter ended September 2024. The same stood at Rs 38,546 crore a year ago.The Anil Agarwal-led mining giant is set to complete the demerger of its key businesses into separate listed entities by the end of FY25, it had said earlier. Under the plan, separate companies will be formed for aluminium, oil and gas, power, steel and ferrous materials, and base metals. Meanwhile, Vedanta Ltd will retain control of its existing zinc business, along with newly incubated ventures.The proposed restructuring will spin off Vedanta's diverse portfolio, which covers over 15 commodities, into independent companies focusing on specific sectors. According to Chairman Anil Agarwal, this transition will shift the company from being an asset manager to an asset owner.In July, Vedanta confirmed that it had received regulatory approvals from leading stock exchanges BSE and NSE for the demerger. The company emphasised that the move would result in sector-specific entities, better positioned to align with India's global leadership aspirations in critical minerals, energy security, renewables, and technology.Vedanta demerger might be too little, too lateHowever, though billionaire Anil Agarwal's decision to demerge Vedanta into separate listed entities aims to unlock value, it is unlikely to fully address the company’s substantial debt burden, which exceeds $4 billion, ET had reported. While the demerger lays the foundation for future debt reduction, it will not be sufficient to meet Vedanta's near-term financial obligations.According to the ET report, Vedanta Ltd's parent company, Vedanta Resources Ltd (VRL), faces significant debt repayments over the next six months, including $1 billion in bond payments due in January 2024. In FY25, VRL will also need to settle $3 billion in debt, plus ongoing interest payments, according to broker estimates.Given that the demerger process is expected to take 12 to 15 months, it is unlikely to provide immediate relief for VRL’s debt obligations. Analysts told ET that, in light of the challenging global commodity market—characterised by slow demand recovery from China—the mining conglomerate may need to pursue refinancing options or consider divesting stakes in Vedanta Ltd or its individual business units.Meanwhile, the company has informed analysts that its consolidated debt levels are expected to remain steady, with debt allocated across the newly formed business units post-demerger.Vedanta Ltd, a subsidiary of Vedanta Resources, is a global natural resources company with operations spanning oil and gas, zinc, lead, silver, copper, iron ore, steel, aluminium, and power across India, South Africa, and Namibia.
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