Vedanta Demerger: Demerger approved – what next? Understand 5 important things for shareholders:

News Topical, Digital Desk : Vedanta shares rose more than 4% today, despite a declining market. The Mumbai NCLT approved Vedanta Limited's demerger plan. This decision is considered extremely positive for Vedanta, leading to buying in the stock. Understand all the key points related to this demerger and its impact on the stock.

What is the demerger plan?

Under the company's plan, Vedanta is going to split into 5 companies. Earlier, there was a plan to split into 6 companies but later the plan for demerger of base metals was dropped. In the revised plan, there was a proposal to split into 5 companies which has now been approved. Under this, the company will be split into these 5 companies : Vedanta Limited: This will be the parent company, which will include Hindustan Zinc, Zinc International, Thoothukudi's copper business and Facor's business. Vedanta Aluminum: Vedanta's aluminum business will include Jharsuguda and Balco smelters, Lanjigarh alumina refinery, Sijimali bauxite mines, as well as the company's captive coal mines and power plants. Vedanta Power: After the demerger, Talwandi Sabo Power will be renamed Vedanta Power Company. This entity will include all of Vedanta's merchant power plants. Vedanta Iron and Steel: This unit will include iron ore mines in Goa, Karnataka, and Liberia. The Jharkhand-based ESL steel plant will also be included. Vedanta Oil and Gas: Malco Energy, which will be renamed Vedanta Oil & Gas, will include the company's Cairn Oil & Gas business.

How many shares will shareholders receive? Under the company's demerger plan, existing Vedanta shareholders will receive one share each from all five companies for every share they hold in the company. This means that a Vedanta shareholder currently holds 100 shares. Following the demerger, they will have a total of 500 shares, with each company holding 100 shares.

What will shareholders benefit from? The primary reason for the demerger is to provide real value to the company's assets. Many analysts believe that in the current company, where all businesses and their assets are combined, the market is undervaluing some businesses. When the companies are separated, each company's valuation will be determined, which will provide better prices for these businesses and reflect this impact on the stock market. Experts will also be able to cover these companies separately, providing better estimates and a clearer picture for the stocks. This will also help shareholders make informed decisions. Experts believe that splitting the company into separate businesses will also make it easier for shareholders to make decisions. For example, if a shareholder believes in the base metals and aluminum businesses and is less confident in the others, or does not want to remain invested in these segments, they can adjust their portfolio based on this after the merger. This means they can increase their focus on the businesses they believe in. This will give Vedanta shareholders greater strategic freedom than before.