Vedanta declared on Friday that its demerger plan is nearing completion and on schedule. In an exchange statement, the mining company also stated that it has scheduled meetings with its creditors and shareholders for the coming months to guarantee a speedy completion of the transaction.

By the end of FY25, the mining behemoth run by Anil Agarwal plans to have all of its major businesses demerged into independent listed companies. The strategy calls for the formation of distinct businesses for base metals, steel and ferrous materials, power, oil and gas, and aluminum. Vedanta Ltd. will continue to be in charge of both its recently incubated businesses and its current zinc business.

With the proposed reorganization, Vedanta's varied portfolio which includes more than 15 commodities will be divided up into separate businesses with a focus on particular industries. Chairman Anil Agarwal claims that this change will make the corporation an asset owner rather than an asset manager.

Vedanta verified in July that the demerger had been approved by the top stock exchanges, the BSE and NSE. The business emphasized that the change will create sector-specific organizations that are more suited to support India's ambitions for global leadership in technology, energy security, vital minerals, and renewable energy.

Vedanta demerger is too little, too late

Even while billionaire Anil Agarwal wants to unlock value by demerging Vedanta into distinct public firms, it is unlikely to completely manage the company's significant debt load, which is estimated to be over $4 billion.

The demerger will not be enough to cover Vedanta's immediate financial obligations, even while it sets the stage for future debt reduction.

The report states that during the next six months, Vedanta Resources Ltd., the parent company of Vedanta Ltd, will have to make large debt repayments, including $1 billion in bond installments that are due in January 2024. Brokers anticipate that VRL will also have to pay $3 billion in debt settlements in FY25, in addition to continuing interest payments.

Since the demerger procedure is anticipated to take 12 to 15 months, VRL's debt obligations are unlikely to be immediately relieved. Analysts told that the mining conglomerate might have to look at refinancing options or consider selling off holdings in Vedanta Ltd. or its individual business units due to the difficult global commodity market, which is marked by a delayed rebound in demand from China.

Analysts have been told by the corporation that its overall debt levels will likely stay the same after the demerger, with debt being distributed among the newly established business groups.