Vedanta shares rise 2% today; here's why

Shares of Vedanta Ltd rose 2 per cent in Thursday’s trade after the Kolkata bench of the National Company Law Tribunal on Wednesday approved Vedanta’s resolution plan for debt-laden Incab Industries Ltd. The tribunal noted that Vedanta would contribute a total financial package of Rs 545 crore to subscribe to 100 per cent of Incab Industries’ paid-up equity shares. Vedanta will also settle the entire admitted claims of gratuity and the Employees Provident Fund Organisation, the tribunal said.

Following the development, Vedanta shares climbed nearly 2 per cent to hit a high of Rs 542 on BSE.

Incab Industries manufactures power cables and industrial wires, using copper and aluminum as key raw materials. With this acquisition, Vedanta will expand its presence in the downstream copper and aluminum industry.

"With key raw materials in power cable and industrial wires manufacturing being Copper and Aluminum, the acquisition brings vertical and downstream synergies for Vedanta. Further, the Pune plant is located just 300 kms from Vedanta’s Silvassa copper unit. The acquisition will support Group’s growth in downstream Copper and Aluminum and expansion in infrastructure and transmission," Vedanta informed stock exchanges NSE and NSE.  

The tribunal said all crystallised and unclaimed liabilities of Incab Industries as of the order date would stand extinguished upon approval of the resolution plan. The deposit made by Vedanta will remain as a performance guarantee until all amounts due to creditors under the plan are paid in full and the plan is fully implemented.

In 2019, the tribunal admitted an insolvency plea by operational creditor Jayanta Banerjee against Incab Industries, which manufactured iron and steel. Financial creditors included ICICI Bank Ltd., Life Insurance Corp. of India, and Pegasus Assets Reconstruction Ltd.

Incab Industries had admitted dues of Rs 3,343 crore to various creditors. The company’s fair value and liquidation value were Rs 512 crore and Rs 429 crore, respectively. In 2022, the committee of creditors approved Vedanta’s resolution plan with 99.37 per cent votes in favour.