Economic Division Raids Vedanta Group Facilities in Mumbai and Delhi

Vedanta Group Faces Enforcement Directorate Searches Over Alleged FEMA Rule Violations

The Enforcement Directorate (ED) is conducting searches at the premises of the Anil Agarwal-led Vedanta group on June 2. The searches are linked to a probe into the royalty payment made by Vedanta to its parent company, Vedanta Resources, allegedly violating the Foreign Exchange Management Act (FEMA) rules pertaining to royalty payments. This development comes at a time when the company is in the process of implementing a demerger through which the existing business is being split into five different verticals.

The searches are being conducted at Vedanta offices in Mumbai and Delhi. At 11:45 am, the Vedanta stock was trading 0.7 percent lower at Rs 334.6. The company's demerger process, which received various regulatory approvals in May, will result in four new listed entities trading on the exchanges. Vedanta Ltd will continue to exist, housing Hindustan Zinc, Zinc International, Copper, Ferro Chrome, and new tech ventures.

The Vedanta group has a significant debt burden, with its foreign parent, Vedanta Resources, having a gross debt of Rs 74,000 crore. Vedanta Ltd is the Indian listed entity of the group with a market capitalization of Rs 1.3 lakh crore. The company has a complex structure, with Vedanta Resources, a UK-based entity, serving as the parent of Vedanta Ltd.

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The demerger process will result in the creation of five new listed companies: Vedanta Aluminium, which will manage aluminium operations, captive power plants, and a 51 percent stake in BALCO; Vedanta Power, which will operate thermal power assets, including the Talwandi Sabo plant; Vedanta Oil & Gas, which will take care of Cairn Oil & Gas; and Vedanta Steel & Ferrous, which will manage iron ore mines and the ESL steel plant.

The company remains committed to compliance with all applicable laws and regulations, and is extending full cooperation to the authorities. However, as the matter is currently under regulatory process, the company is unable to comment further at this stage.