Vedanta Limited has disclosed an encumbrance on 50.1% of its equity share capital in subsidiary Hindustan Zinc Limited (HZL). This action stems from undertakings provided in connection with the issuance of unsecured, redeemable, non-convertible Debentures valued at ₹2,575 Crore on a private placement basis, executed on March 12, 2026. The encumbrance requires VEDL to remain the legal and beneficial owner of the 50.1% stake until the Debentures are fully redeemed.
Mandatory Disclosure on HZL Equity
Vedanta Limited (VEDL) has officially disclosed an encumbrance related to its shareholding in its subsidiary, Hindustan Zinc Limited (HZL), as required by securities regulations. This filing pertains to specific mandatory undertakings provided by VEDL in favor of the Debenture Trustee.
Basis for the Encumbrance
The core reason for this disclosure relates to the issuance of unsecured, listed, rated, and redeemable, non-convertible Debentures by Vedanta Limited, aggregating to ₹2,575 Crore, issued via private placement. A Debenture Trust Deed (DTD) was executed on March 12, 2026, with Axis Trustee Services Limited acting as the trustee for the debenture holders.
Key Obligation Under DTD
Pursuant to the DTD, Vedanta is obligated, until the full and final redemption of these Debentures, to:
- Directly remain the legal and beneficial owner of 50.1% of HZL’s share capital (on a fully diluted basis).
- Directly control HZL.
- Refrain from creating any security over or disposing of 50.1% of the entire issued share capital or voting rights in HZL.
These mandatory conditions under the DTD fall within the regulatory definition of an “encumbrance”.
Summary of Encumbrance Details (As of March 12, 2026)
The disclosure details the following holding and creation:
- Promoter Holding in HZL (Pre-Event):
- 2,359,003,222 shares, representing 55.83% of total share capital.
- Event Type:
- Creation of encumbrance on March 12, 2026.
- Type of Encumbrance:
- Others, specifically due to contractual undertakings in the DTD (as detailed in Note 1).
- Number of Shares Encumbered:
- 2,11,68,84,819 shares.
- Percentage of Share Capital Encumbered:
- 50.10%.
- In Favour Of:
- Axis Trustee Services Limited, acting on behalf of the Debenture Holders.
Historical Context and Adjustments
The filing also provides context on previous encumbrances on HZL shares, including a significant Non-Disposal Undertaking established on May 23, 2022, covering 50.10% of the share capital. Furthermore, the annexures indicate historical pledge releases that have occurred under different facilities between September 2023 and July 2025.
It is noted that due to the nature of the current DTD covenants, the “Post event holding of encumbered shares” (55.83%) will not equal the sum of the previously encumbered holding and the newly created encumbrance, as the current covenant maintains VEDL’s required ownership percentage.
Source: BSE
