NCLT Mumbai reserves order on Vedanta's demerger proposal; petroleum ministry cites concerns

The Mumbai bench of the National Company Law Tribunal reserved its order in the matter of the proposed Vedanta demerger, which India’s petroleum and natural gas ministry has opposed.

“We heard both the parties. The matter is reserved for orders,” the newly constituted bench of Justices Nilesh Sharma and Charanjeet Singh Gulati said in an oral order on Wednesday after hearing the application filed by Vedanta seeking regulatory clearance on its proposed demerger under Sections 230-232 of the Companies Act.

During the hearing, the ministry of petroleum and natural gas cited its concerns over potential financial risks after the Vedanta demerger, misrepresentation of the country’s hydrocarbon assets, and insufficient disclosure of liabilities. The ministry's objections in the tribunal have led to a major roadblock for the demerger.

The Vedanta Group led by billionaire Anil Agarwal announced a plan in 2023 to split its operations in India into five separate, publicly listed companies — Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Iron and Steel, and a restructured Vedanta Ltd, which will hold the zinc and silver businesses (via Hindustan Zinc) and serve as an incubator for new technologies and ventures.

The proposed demerger aims to reduce the company’s debt with a focus on creating independent businesses and providing value for stakeholders.

While passing the order, the tribunal should consider adequate protection of the government of India’s interests, said Brijender Chahar, the additional solicitor general representing the ministry, pointed out.

“As a sectoral regulator, that is our primary concern,” Chahar pointed out.

Sebi approval

Vedanta countered the ministry’s objections. It informed the tribunal that it had already secured approval from the Securities and Exchange Board of India, the market regulator, after revising its demerger scheme in line with regulatory requirements. Vedanta argued that even if the ministry was a sectoral regulator, it is neither a creditor nor a stakeholder in the company.

“We are not supposed to meet some wishlist that is given by the MoPNG – we have to fulfil statutory shortcomings, if any,” said senior counsel Ravi Kadam, who represented Vedanta.

Vedanta has postponed its demerger deadline to March 2026 from the earlier target of September 2025, citing pending approvals from the NCLT and government authorities.

“Vedanta remains committed to the proposed demerger, which aims to create independent, sector-specific entities across aluminium, oil and gas, power, and iron and steel,” a company spokesperson said on Wednesday.