The Mumbai ITAT ruled that a demerger is not tax-neutral if shares are issued by the holding company instead of the subsidiary receiving the business. This decision impacts corporate restructuring, requiring companies to re-evaluate demerger structures and their tax implications under the Income-tax Act.
Vedanta Aluminium shares have fallen 12% since their listing, losing over Rs 25,000 crore in investor wealth, while its demerged siblings have gained. The decline is attributed to a correction in aluminium prices post-Iran-US peace deal and a debate over the metal's circular nature versus primary supply.
Vedanta's demerger exercise concludes as four entities—Vedanta Aluminium Metal, Vedanta Oil & Gas, Vedanta Power, and Vedanta Iron & Steel—begin trading on Indian stock exchanges on June 15. This move aims to unlock shareholder value and allow each business to pursue sector-specific opportunities with greater flexibility.
Vedanta shares saw a technical price adjustment of nearly 65% on the NSE as the company began trading ex-demerger. The move separates four core business units into independent entities, a restructuring aimed at unlocking long-term shareholder value.
Associated British Foods announced the demerger of its Primark arm, sending shares down 5.6%. The spin-off aims to create a pure play food producer on FTSE 100 and unlock Primark's potential as a standalone listed business. The discount retailer faces intensifying competition from Chinese online giants Shein and Temu, with ABF reporting a 2% revenue fall and 18% profit drop in H1.
Associated British Foods is poised to announce plans for a demerger of its Primark fashion business this week, as the group faces mounting pressures across both its fashion and food divisions. The potential split follows a strategic review announced in November and comes amid disappointing trading, with flat annual sales and falling profits. The Middle East conflict is expected to add further cost pressures, while the company also grapples with a competition regulator investigation into its planned bakery merger with Hovis.
