Vedanta Power Initiates Postal Ballot for ESOPs and Related-Party Deals

• Proposed ESOP/ESPP covering 5% of total equity to be sourced via secondary market.
• Seeking approval for Rs 5,777 crore in related-party transactions with group entities for FY 2026-27.

Reader Takeaway: Secondary market sourcing limits dilution, while RPTs are positioned as vital for post-demerger operational and supply chain integration.

What just happened

Vedanta Power Limited (formerly Talwandi Sabo Power Limited) has launched a postal ballot process to seek shareholder approval for several strategic resolutions. These include the implementation of the 'Vedanta Power Limited – Employee Stock Option Plan 2026' and the 'Employee Share Purchase Plan 2026'. The company is also seeking mandates for significant related-party transactions (RPTs) totaling Rs 5,777 crore with Vedanta Limited and Vedanta Aluminium Metal Limited for the 2026-27 fiscal year.

Why this matters

The company is using a trust-based mechanism to administer employee benefits. By utilizing secondary market acquisitions rather than issuing new shares, the firm aims to minimize equity dilution for existing shareholders. The loans extended to the 'VEDPOWER ESOS Trust' are interest-free and intended to be repaid through the exercise and sale of shares within the schemes.

Material Related Party Transactions

The proposed RPTs are categorized as essential for operational continuity following the company's recent demerger. The largest share of the proposed transaction value is allocated to Vedanta Limited, amounting to Rs 4,856 crore, primarily covering corporate expense allocations, reimbursements, and guarantees. A further Rs 921 crore is earmarked for power purchases and expense reimbursements with Vedanta Aluminium Metal Limited. Management asserts that these transactions are conducted at arm's length.

Voting and Timeline

Shareholders as of the cut-off date of September 18, 2026, are eligible to vote. The e-voting window is open from September 24, 2026, at 9:00 AM until October 23, 2026, at 5:00 PM. The company has clarified that the process will be conducted exclusively through remote e-voting, and physical ballot forms will not be accepted.

Risks to watch

Investors should monitor the impact of secondary market purchases on stock liquidity and price volatility. Furthermore, while the company defines these RPTs as operational requirements, the significant size of the financial commitments to related entities remains a key oversight area for institutional and retail investors alike.