Vedanta Restructures, Splits Units and Sells BALCO Stake

Key Corporate Actions Take Effect

Following board approval, Vedanta Limited is proceeding with a significant corporate overhaul. A Composite Scheme of Arrangement will see key business undertakings – Aluminium, Merchant Power, Oil & Gas, and Iron Ore – demerged, effective May 1, 2026. The company will also divest its shareholding in Bharat Aluminium Company Limited (BALCO) by April 30, 2026. This strategic split aims to create separate, focused entities and unlock shareholder value.

Strategic Rationale for the Split

This strategic move aims to unlock value by creating distinct, focused business units. Each demerged entity is expected to operate with greater agility, pursue targeted growth strategies, and attract specific investor interest. The rationalisation could lead to enhanced operational efficiencies and potentially better valuations for individual business segments.

Historical Context and Approvals

Vedanta's journey towards this restructuring has been years in the making, with initial proposals dating back to 2023. The plan received crucial approval from the National Company Law Tribunal (NCLT) Mumbai bench in December 2025, clearing procedural hurdles. Vedanta's stake in BALCO has been a long-standing subject of discussion, with the government previously considering an IPO for its residual stake amidst past valuation disputes. The company has also navigated past regulatory scrutiny, including SEBI penalties for disclosure lapses and allegations concerning related-party transactions.

Structural Changes for Shareholders

Shareholders will receive equity shares in the demerged entities (Aluminium, Merchant Power, Oil & Gas, Iron Ore) based on a 1:1 swap ratio. Separate listed companies will emerge, allowing for greater focus on individual business performance and strategic direction. Vedanta's stake in BALCO will be transferred to Vedanta Aluminium (VAML). Talwandi Sabo Power Limited (TSPL) and Malco Energy Limited (MEL) are expected to be renamed 'Vedanta Power Limited' and 'Vedanta Oil and Gas Limited' respectively, subject to approvals. The existing Vedanta Limited entity will continue to house the base metals business and act as an incubator for new ventures.

BALCO Sale Risks and Terms

The consideration for the sale of BALCO shares involves Compulsorily Convertible Debentures (CCDs), which must be no less than the fair market value of BALCO as per Income Tax Rules, 2026. Any deviation could attract regulatory scrutiny.

Industry Peers and Benchmarks

Vedanta's demerged entities will operate in sectors with established players:

• Aluminium: Hindalco Industries, National Aluminium Company (Nalco).
• Oil & Gas: ONGC, Oil India, Reliance Industries.
• Iron Ore: NMDC Ltd.
  These peers serve as benchmarks for operational and financial performance within their respective segments.

BALCO Financial Snapshot

BALCO reported a turnover of ₹15,909.00 cr for the year ended March 31, 2025. Its net worth as of March 31, 2025, was ₹12,088.00 cr. These figures represent approximately 10% of Vedanta's consolidated turnover and 39% of its consolidated net worth.

Upcoming Milestones to Monitor

Key dates to watch include the finalisation and signing of the agreement for the sale of BALCO shares by April 30, 2026, and the official effectiveness of the Composite Scheme of Arrangement on May 1, 2026. Investors should also track any further announcements regarding name changes for TSPL and MEL, and the listing of the new entities. Evaluating the execution of the demerger and BALCO sale process will be crucial for assessing potential value unlocking.