The delay in Vedanta’s long-awaited demerger has created uncertainty in the market and raised concerns about its effect on shareholders. The National Company Law Tribunal (NCLT) has postponed the crucial hearing on Vedanta’s demerger plan to September 17, 2025. This decision has put the company’s timeline at risk, as regulatory objections from both the government and market regulators continue to hold back progress.
The demerger, first announced in September 2023, was aimed at separating Vedanta’s diverse businesses into multiple independent listed entities. The idea was to unlock value for shareholders by creating sector-specific companies across oil and gas, aluminium, power, steel, and base metals. However, repeated delays and objections have shaken investor sentiment, pushing Vedanta’s stock lower and leaving stakeholders anxious about the future.
The postponement of the demerger hearing is largely due to objections raised by key government bodies and procedural warnings from the market regulator. The Ministry of Petroleum and Natural Gas has raised concerns about recovery of dues linked to Vedanta’s oil and gas operations. At the same time, the Securities and Exchange Board of India (SEBI) has issued a warning, pointing to procedural lapses in the company’s handling of the demerger scheme.
Although Vedanta has argued that SEBI’s warning is only procedural and does not question the merits of the demerger itself, the government’s allegations of misrepresentation and non-disclosure of facts have added a serious legal dimension to the issue. These objections could not only cause further delays but may even challenge the viability of the restructuring.
The NCLT had already extended the demerger deadline once, pushing it from March 2025 to September 30, 2025. With the hearing now delayed beyond that extended timeline, the execution of the plan has become uncertain.
Investors have reacted negatively to the news of the delay and regulatory objections. Vedanta’s share price fell by nearly 2.4 to 3 percent, slipping to around ₹438.15 on the National Stock Exchange. This decline reflects the nervousness among shareholders who had been expecting the demerger to unlock hidden value in Vedanta’s diverse portfolio.
Market analysts have noted that the sharp fall in the share price is not only due to the delay but also because of fears that the government’s objections could escalate into long legal battles. Such battles often discourage fresh investments and create doubts about whether the restructuring will ever take place in its original form.
When Vedanta first announced the demerger plan in 2023, it presented the move as part of a larger strategy called the “3D Plan,” which stood for Demerger, Diversification, and Deleveraging. Chairman Anil Agarwal outlined a vision where each of the new companies would have the potential to grow into a $100 billion business in the future.
The logic behind the demerger was simple. By separating the businesses, management could focus on individual sectors, attract investors specific to those industries, and bring clarity to capital allocation. For shareholders, this promised better value discovery, as pure-play companies in metals, oil, gas, and power often trade at higher valuations compared to diversified conglomerates.
The plan also came at a time when Vedanta carried a debt of over ₹80,000 crore. By breaking the group into different entities, the company hoped to deleverage and bring in new funding partners to reduce its financial burden.
The delay in the demerger is not just about missed deadlines. For shareholders, it creates both financial and psychological setbacks. Firstly, the prolonged uncertainty means that the value unlocking expected from the demerger is postponed. Investors who were holding shares in anticipation of quick restructuring gains are left waiting indefinitely.
Secondly, delays increase risks that debt, tax liabilities, or regulatory disputes could spill into the balance sheets of the demerged entities. This could reduce the attractiveness of the new companies when they are eventually listed. For instance, if oil and gas liabilities remain unresolved, the new oil and gas entity may start with a weaker financial profile.
Thirdly, the ongoing objections and warnings from regulators could hurt Vedanta’s reputation in the eyes of institutional investors. Large global funds often look for transparency and compliance before committing money to emerging market companies. Any impression of non-disclosure or misrepresentation could push them away.
If the demerger continues to face delays, shareholders may experience long-term disadvantages. Operational risks could arise if the separation of businesses happens in a hurried or partial manner, leaving some entities saddled with debt.
Legal uncertainty is another significant risk. If the government continues to press allegations of misrepresentation, Vedanta could face drawn-out litigation. Such cases tend to drag on for years, further delaying restructuring benefits.
Share price volatility is also a concern. Short-term swings are already visible, with shares falling on negative news. If delays stretch further, investors may start applying a “conglomerate discount” to Vedanta, valuing it lower than peers in similar industries because of the uncertainty.
Despite these concerns, there are reasons to believe that the demerger could still succeed. SEBI has not raised any objection to the substance of the demerger plan, only issuing a procedural warning. If Vedanta addresses these compliance issues, regulatory approval may eventually come through.
The company has also tried to ease government concerns. For example, Vedanta has proposed giving a corporate guarantee to the Ministry of Petroleum and Natural Gas, ensuring that dues under production-sharing agreements will be honored even after the demerger. This shows that the company is willing to negotiate and make adjustments to protect the interests of the government.
These steps could smoothen the process if regulators accept them as adequate safeguards. If the September 17 hearing results in a positive outcome, investor confidence could return quickly, pushing the share price higher.
Shareholders should recognize that the demerger delay does not necessarily mean the plan will fail. If successful, the restructuring could still deliver long-term benefits by creating focused companies with growth potential. However, the timing of such value unlocking remains uncertain, and near-term returns are at risk.
The government’s involvement makes this case more complicated than an ordinary corporate restructuring. Political sensitivities around oil and gas revenues, as well as tax dues, mean that the demerger is not just a business issue but also a policy matter. Shareholders should be prepared for possible changes in the scheme, partial approvals, or further postponements.
The delay in Vedanta’s demerger is a clear short-term setback for shareholders. It has shaken market confidence, caused a decline in share prices, and raised doubts about the timeline for unlocking value. Regulatory objections from the government and SEBI’s procedural warning have complicated the process further.
However, the long-term prospects of the demerger remain alive. If Vedanta can satisfy regulators and proceed with a clean separation of businesses, the benefits of clarity, focused growth, and better valuations could still materialize.
For now, shareholders must prepare for volatility and accept that the road to restructuring will not be smooth. The next crucial date is September 17, 2025, when the NCLT will review the case again. A favorable outcome could restore confidence and set the stage for Vedanta’s ambitious growth plans. A negative outcome, however, would deepen uncertainty and prolong the wait for value creation.