Vedanta’s board has approved the much-awaited demerger of its business, which will result in the creation of four separate entities. The Anil Agarwal-led mining major also announced the demerger record date as 1 May.
Vedanta will demerge its businesses into aluminium, merchant power, oil and gas and iron ore verticals into separate listed entities. As part of the spin-off, each shareholder will be allotted shares in the ratio of 1:1 for each demerged entity.
So, if you hold one Vedanta share as on the record date, it means that you will end up with five shares on the ex-date.
Vedanta demerger: What is the last day to buy shares?
But one thing investors must note about Vedanta’s demerger date is that it falls on a stock market holiday. Therefore, it changes the last day by which one must buy the shares of metal stock. Both BSE and NSE will be shut for trading on 1 May for Maharashtra Day.
Firstly, Vedanta will start trading without the demerged entities from April 30 onwards. Since April 30 is the ex-date for Vedanta’s demerger, buying the stock on or after the ex-date makes you ineligible for the demerger benefit.
Since the Indian stock market follows a T+1 settlement system, investors must purchase shares of Vedanta at least one day before the record date to enjoy the spin-off action, making 29 April the last day to purchase shares for the same.
However, Nuvama Research said that it’s best advised that anyone looking to play the demerger trade should take positions by 28 April for safer execution.
Vedanta demerger details
As part of the demerger, Vedanta plans to separately list four entities: Vedanta Aluminium Metal Limited (VAML), Talwandi Sabo Power Ltd (TSPL), Malco Energy Ltd (MEL) and Vedanta Iron and Steel Limited (VISL).
As consideration for the demerger of the aluminium undertaking, VAML shall issue and allot one fully paid-up equity share of VAML having a face value of ₹1 each for every one fully paid-up equity share of ₹1 each of Vedanta.
For the merchant power undertaking, TSPL shall issue and allot one fully paid-up equity share of TSPL having a face value of ₹10 each for every one fully paid-up equity share of Vedanta.
For the Oil and Gas undertaking, MEL shall issue one equity share of MEL of face value of ₹1 each for each fully paid-up share of Vedanta held by the shareholder.
Lastly, as consideration for the demerger of the iron ore undertaking, VISL shall issue and allot one fully paid-up equity share of VISL with a face value of ₹1 for every one fully paid-up equity share of Vedanta.
Vedanta further added that non-convertible debentures (NCDs) forming part of the aluminium undertaking for specific ISINs will be transferred to Vedanta Aluminium Metal. Additionally, Vedanta has also approved the transfer of its shareholding in Bharat Aluminium Company Ltd (BALCO) to Vedanta Aluminium Metal Ltd.
Following the implementation of the scheme, the names of Talwandi Sabo Power and Malco Energy will change to Vedanta Power and Vedanta Oil and Gas, respectively.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
