**Vedanta’s Talwandi Sabo Power Ltd. Demerger Approved by NCLAT**
The National Company Law Appellate Tribunal (NCLAT) has approved the demerger of Talwandi Sabo Power Ltd. (TSPL) from its parent company, Vedanta Ltd., overturning a previous lower court ruling that had halted the process. This decision follows a settlement reached on September 11 between TSPL and China’s Sepco Electric Power Construction Corp., a creditor that had raised objections regarding the demerger due to unpaid dues amounting to ₹1,251 crore. The specifics of the settlement remain undisclosed.
Vedanta announced in a stock exchange filing that the settlement resolves all claims and counterclaims, including the withdrawal of ongoing arbitration proceedings, thereby closing legacy disputes and enhancing TSPL’s operational stability. TSPL is a key entity within the Vedanta Group, which manages its power assets.
The NCLAT’s ruling is a significant relief for Vedanta, as the demerger is aimed at reducing the company’s debt and enhancing shareholder value by creating focused, independent businesses. A JP Morgan report from August indicated that Vedanta’s net debt was ₹54,437 crore in FY25, with expectations to decrease to ₹42,445 crore by FY28.
A bench led by Justices Yogesh Khanna and Ajai Das Mehrotra noted that the matter had been amicably settled during the appeal process, leading to the annulment of the contested order. Earlier, in March 2025, the National Company Law Tribunal (NCLT) had rejected TSPL’s demerger scheme due to insufficient disclosures regarding the company’s debt obligations. TSPL and Sepco were previously engaged in legal disputes over engineering, procurement, and construction contracts for a thermal power project.
In May, the NCLAT had temporarily stayed the NCLT’s order, imposing a conditional requirement for TSPL to provide bank guarantees of ₹1,245 crore. Senior counsel Arun Kathpalia, representing TSPL, requested the tribunal to release these guarantees, emphasizing that the company had complied with the directive. He argued that the NCLT’s rejection was based solely on the undisclosed status of Sepco as a creditor.
Under the proposed demerger scheme, Vedanta Ltd. plans to separate five of its businesses into distinct subsidiary companies, with each subsidiary set to be listed on the stock exchange. However, Vedanta later decided to retain its base metals business, resulting in the demerger of only four businesses.
**FAQ**
**What is the significance of the NCLAT’s ruling for Vedanta?**
The NCLAT’s ruling allows Vedanta to proceed with the demerger of TSPL, which is expected to help reduce the company’s debt and enhance shareholder value by creating more focused and independent business entities.
