Home >companies >news >Court ruling clears way for Vedanta overhaul to complete

London: A division bench of the Bombay high court in Goa has cleared the way for oil and mining group Vedanta Resources Plc. to streamline its sprawling structure, dismissing on Monday an appeal by a shareholder of unit Sesa Goa Ltd that could have stopped or delayed the move.

Vedanta shares rose on the news, increasing gains on the day to climb 2% to change hands at 1,268 pence, against a 1.3% rise in the sector.

Vedanta, controlled by billionaire Anil Agarwal, said early last year it planned to overhaul its web of subsidiaries, creating an umbrella unit that will group most of its assets. Under the consolidation plan, the firm’s copper unit Sterlite Industries India Ltd will be merged with iron ore unit Sesa Goa to create an operating subsidiary, Sesa Sterlite.

The Madras high court approved that plan last month, but news of the Sesa Goa shareholder appeal had prompted some concern that timing could slip yet again.

The division bench of the Bombay high court, through its order dated 12 August, has “sanctioned the scheme of amalgamation and arrangement amongst Sterlite Industries (India) Ltd...and Sesa Goa Ltd and their respective shareholders and creditors...," Sesa Goa said in a statement.

Vedanta hopes the restructuring plan will attract new investors and improve access to cash to help pay down its debt.

A Vedanta spokesperson did not respond to phone calls. Vedanta officials have earlier said the merger can be quick if the court’s verdict was in favour of the group.

Vedanta had announced a consolidation plan for the group on 25 February 2012, under which it proposed a merger of Sterlite Industries with Sesa Goa. The new entity was to be called Sesa Sterlite. Three shares of Sesa Goa were to be issued for every five existing shares of Sterlite, the company had said.

London-listed Vedanta had also proposed that its direct holding of 38.8% in Cairn India would be transferred to Sesa Goa, together with the associated debt of $5.9 billion. After the transfer, Sesa Sterlite would have a 58.9% shareholding in Cairn India, it said.

The firm has also said that Vedanta Aluminium Ltd and the Madras Aluminium Co. Ltd would be consolidated into Sesa Sterlite. The firm had said its objective was to simplify the structure of the group as well as to create a natural resources entity with a global footing, but investors raised concerns about the huge debt that was being transferred from the parent to the Indian firm.

Mint’s Ruchira Singh in Mumbai contributed to this story.

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