Vedanta Limited (VEDL) has disclosed an encumbrance on its equity shares of subsidiary Hindustan Zinc Limited (HZL) pursuant to new Debentures issued via private placement. The total value of the Debentures is ₹2,575 Crore. Until final redemption, VEDL is legally required to retain 50.1% of HZL’s share capital, leading to this disclosure under the Takeover Regulations. This action was documented via a Debenture Trust Deed executed on March 12, 2026.
Encumbrance Disclosure Triggered by New Debt
Vedanta Limited (VEDL) has filed a disclosure regarding the creation of an encumbrance on its holding in its subsidiary, Hindustan Zinc Limited (HZL), in compliance with securities regulations. This action stems from the issuance of unsecured, listed, rated, redeemable, non-convertible Debentures totaling ₹2,575 Crore through a private placement.
The formal agreement, a Debenture Trust Deed, was executed on March 12, 2026, with Axis Trustee Services Limited acting as the Debenture Trustee on behalf of the Debenture Holders. The disclosure specifically notes that the total number of shares involved in this new encumbrance is 2,11,68,84,819, representing 50.10% of HZL’s total share capital.
Key Undertakings and Restrictions
The primary condition necessitating this disclosure is a covenant within the Debenture Trust Deed. Until the Debentures are fully redeemed, VEDL is mandated to remain the legal and beneficial owner of 50.1% of HZL’s share capital (on a fully diluted basis) and maintain direct control over HZL. Furthermore, VEDL is explicitly restricted from creating any security over or disposing of this 50.1% stake or the associated voting rights.
The document confirms that the nature of these provisions falls within the regulatory definition of an “encumbrance” under Chapter V of the Takeover Regulations.
Summary of Shareholding Status
As of the reporting date, March 16, 2026, the promoter holding of VEDL in HZL stands at 60.71%. The newly created encumbrance covers 50.10% of the total share capital. The post-event holding of encumbered shares remains at 2,359,003,222 shares, or 55.83% of the total share capital, reflecting the continuing encumbrances from prior arrangements.
Historical Context and Releases
The filing also provides historical context on existing encumbrances, which primarily involve various pledge agreements and non-disposal undertakings since March 2022. Of note, several Pledge Releases have occurred between September 2023 and July 2025, totaling approximately 140.7 million shares (or 3.34% of the share capital) that were previously pledged under various facilities.
Debenture Holders Noted
The filing lists several key entities acting as Debenture Holders at the time of allotment, including major funds and institutions such as Aditya Birla Sun Life Balanced Advantage Fund, Barclays Bank PLC, ICICI Prudential schemes, Kotak Dynamic Bond Fund, and Reliance General Insurance Company LTD, among others.
Source: BSE
